1. You must place orders for at least 50% of the annual demand.
2. There is a limited production capacity (only about 50% of total). The rest is available after the Las Vegas show.
3. The earlier capacity should be used to produce the least risky items.
4. What is risk in this context?
1. Items with high variability in demand (can result in large overstocking).
2. Items that are very expensive (overstocking can be very expensive).
5. For this exercise, we are not considering the price. So, focus only on the variability.
6. Also focus on the minimum production requirement for any item – 600 units.
7. Variability of demand is also called Coefficient of Variation (Std. Deviation/Mean).
8. What operational changes would you recommend to Wally to improve performance?
9. Examine the operations in the China plant. What would you suggest to make this plant more productive?
10. What changes should be made to the way demand forecast is made? Examine how information is collected and suggest better ways to collect this information.
11. Examine the supply chain. What changes would you suggest?