Reebok NFL Replica Jerseys: A Case for Postponement
The purpose of this report is to make an analysis of the case “Reebok NFL Replica Jerseys” in order to determine an appropriate inventory planning approach to overcome the challenges faced by Reebok. In connection to this the problem statement is as follows
The report will be initiated with a short description of the issues in the case as well as how the company copes with some of these issues using the concept of risk pooling. Furthermore, there will be an analysis of which inventory planning approach should be used to overcome these issues and what other operational improvements must be considered. Finally, any limitation of the suggested planning approach will be pointed out.
One of the main issues of the case is the demand fluctuation. Demand strongly correlates with the performance of the various players and teams. If a team performs well and no one expected it, their jersey will become a “hot market item” resulting in a boost in demand which creates shortages. Another issue in the case is the planning of inventory. The purpose is to order the amount that increases the expected profit and to maintain a satisfactory service level. Forecasting of demand is also a big challenge which is closely related to the first issue described.
Reebok reduces the impact of the issue regarding demand by exploiting the concept of risk pooling. This is done by using a postponement strategy in which they move the decoupling point down the supply chain by printing some of the jerseys at the Reebok distribution center. Thereby, the demand is aggregated across products and becomes easier to forecast. As indicated earlier there is a strong correlation between the demand for the jerseys and the performance of the teams which leads to a high coefficient of variation for the jerseys. This claim strengthens the impact of risk