Abstract
This paper revolved around two core research issues: production location selection and subsequent production decisions. The aim of the study was to provide a detailed analysis of Sport Obermeyer's data from 1992 to 1995 in a new way, hoping to assist companies facing similar challenges. The paper took Cost, Quality, Lead time and Minimum order quantity as bridges to the four main factors affecting the choice of production location. It detailed the advantages and disadvantages of the two production locations: Hong Kong and China. Then, with the aid of the Newsvendor model, the mismatch cost ratio for the 10 styles was determined. Ultimately, using the coefficient of variance for comparison and confirmation of the mismatch cost ratio results, the paper helped Sport Obermeyer analyze which styles of parkas had low-risk and low-uncertainty demand, and which had high-risk and high-uncertainty. The paper then combined the characteristics of the two production locations and assisted Sport Obermeyer in making subsequent production decisions. Five styles of parkas suitable for production in China and five styles suitable for production in Hong Kong were identified, ensuring stable profits and deliveries for Sport Obermeyer.
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