Presented by: Evi Tjandradjaja M9701803 Sung Evi Yuliati M9701805 Yap Lie Sian M9706807 Melani Adria

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Presented byEvi Tjandradjaja
M9701803Sung Evi Yuliati M9701805Yap Lie Sian
M9706807Melani Adrian M9715805
Reebok NFLThe Value of Information
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Group Members
LiE sian
EVI T
EVI Y
melani
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Outline
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(No Transcript)
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The History of Reebok
Headquarter in Canton, Massachussets
Started as small British shoe company
Reebook
In 1979, Paul Fireman acquired North American
license for selling Reebok
In 1985, Reebok USA acquired Reebok British and
Reebok International went public
In 2000, Reebok signed 10 years contract with NFL
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Reebok NFL
Licensed Apparel Business
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About NFL

• Its a professional American football league
• Consist of 32 teams
• Teams are assigned to 2 conferences American
  Football Conference National Football
  conference
• Each conference is divided into 4 areas North,
  east, south, west

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PROBLEM
I have a warehouse full of Jerseys out there and
retailers are screaming for the team and players
I dont have! Every year it seems like we have
the right mix of inventory going into the season,
and then some team that no one expected to do
well gets off to a 4-0 start and the team
everyone expected to contend for the Super Bowl
Is losing games. Suddenly I have 1000s of jerseys
I cant sell and 1000s of order I cant fill
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DEMAND VARIATION

• Customer demand fluctuate
• Driven by the excitement and passions feel for
  the game.
• One way to express their support is by adorning
  the jerseys of the favorites player on the
  favorites teams.
• Hot market demand
• Hot market item (demand), is an item that was
  either not expected to sell well before the
  season or an unknown item that had no prior sales
  expectations.
• For example
• 1. Some team that no one expected to do well
  gets off and the team everyone expected to
  contend is losing games
• 2. Regular player become super star.

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Jersey
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SWOT Analysis
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The Sales Cycle
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Reebok Supply Chain
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Reebok Supply Chain (Cont)
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DEMAND FOR NFL REPLICA JERSEYS

• Each team a distinct combination of style,
  cuts, colors, and team logo
• NFL season drives much the demand
• August and September are the highest sales
• Holiday present and the anticipation of the
  playoffs is a driven after season
• Hot market item

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Production Planning

• Start 14 months before the beginning of the
  target NFL season
• Reebok place purchase order twice per month from
  July to October on its CMs (delivery planned for
  April)

The most difficult time of year for Reeboks
planner
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Planning Problem

• Reebok places order on March to June to cover
  pre-season order from retailer
• Wholesale price 24 (retail price 50),
  manufacturing cost 9.50 for blank Jerseys and
  10.90 for dressed, decorated cost 2.40
• Leftover handling sell it to discounter or hold
  it for next season
• Risk of holding leftover team may change their
  style or color of their Jersey.
• Forecast developed based on past sales, team and
  player performance, market intelligence, advance
  order, informed guess.
• Team and player level forecast ? 6 most popular
  players

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Problem Discussion
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Question

• Given the uncertainty associated with player
  demand,
• how should Reebok approach inventory planning for
  NFL

2. What should Reeboks goal be? Should Reebok
minimize inventory at the end of the season? Or
Maximizing profits? Can Reebok achieve both? What
service level should Reebok provide to its
customer?
3. Are the models in Section 2.2.2 helpful here?
What is the cost of underage for a dressed
Jersey? What is the cost of overage for a dressed
Jersey? How might Reebok decide between dressed
Jersey and blank Jersey?
4.Using the forecast for the New England
Partiots, what is the optimal quantity to order
for each player? For blank Jerseys? What profit
do you expect from Reebok? How much and what type
of inventory is expected to be leftover at the
end of the season? What service level?
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• Given the uncertainty associated with player
  demand,
• how should Reebok approach inventory planning for
  NFL

• Uncertainty associated with player demand
• Player may be transferred to other team
• Not popular player may become a new star
• Popular player may underperform

• Generate team and player level forecast
• Offer 20 discount for early order in
  January-February
• Prepare 1,728 dressed Jerseys for any player
• Prepare blank Jerseys (shared with other apparel
  items)
• Provide printing facility in the Reeboks DC
  (capacity 10,000 Jerseys per day)
• Outsource the deficit of production local
  manufacturing

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2. What should Reeboks goal be? Should Reebok
minimize inventory at the end of the season? Or
Maximizing profits? Can Reebok achieve both? What
service level should Reebok provide to its
customer?

• The goal To provide customer with a quality
  product, in the right time, and in the right
  quantity.
• Reebok should minimize its inventory to maximize
  its profit by reducing holding cost and the risk
  of leftover in each season
• Yes, the key is in the forecast. The more
  accurate, the greater chance to achieve both of
  the goals.
• High service level providing all customer order,
  including the revised order

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3. Are the models in Section 2.2.2 helpful here?
What is the cost of underage for a dressed
Jersey? What is the cost of overage for a dressed
Jersey?

• Yes it is. Reebok use combination of forecast and
  known demand to place order for their supplier.
  Forecast developed based on past sales, team and
  player performance, market intelligence, advance
  order, informed guess. Forecast is revised as the
  sales cycle unfold
• Cost of blank 9.50
• Cost of Dressed 10.90
• Salvage value 7
• Wholesale Sale Price 24
• The cost of underage for dressed jerseys
• Wholesale Sale Price - Cost of Dressed 24 -
  10.90 13.10
• The cost of overage for dressed jerseys
• Cost of Dressed salvage value 10.90 - 7
  3.90

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3. How might Reebok decide between dressed Jersey
and blank Jersey?

• Order on July-October blank Jersey (stored in
  CM), January-February dressed Jerseys (known
  demand), combination of dressed Jerseys (order)
  and blank Jersey (forecast).
• Dressed Jerseys are made based on the order and
  minimum order quantity for each player. While
  blank Jerseys are allocated for unexpected demand
  and hot-market item

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4.Using the forecast for the New England
Patriots, what is the optimal quantity to order
for each player?
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4. For blank Jerseys? What profit do you expect
from Reebok?
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4. How much and what type of inventory is
expected to be leftover at the end of the season?
What service level?

• Service level E(Sold) / ( E(Sold) E(Unmet))
• 87,055 / (87,055 629)
• 99.26
• The inventory that is expected to be left over at
  the end of season are blank jerseys on the level
  of 33,313.

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Thank You For Your Attention !!