For the purpose of this assignment suppose that each style sells for $100, costs $76 to make, and has a salvage value of $68. These numbers lead to the same 24% profit margin and 8% overage cost that is mentioned in the case.

1. The product that Sport Obermeyer offers portray some of the single period inventory model properties. What are the assumptions of the single period model that are NOT valid for Sport Obermeyer?

2. Suppose that there are no minimum orders and there is no Vegas show (and therefore an opportunity to update forecasts). Using the sample data given in Exhibit 10 and cost figures above, make a recommendation for how many units of each style Wally Obermeyer should order during the initial (and only) phase of production. Assume that all ten styles in the sample problem are made in Hong Kong.

3. Suppose that there are still no minimum orders but Sport Obermeyer has an opportunity to update forecasts and production quantities after the Vegas show as highlighted in the case. Using the sample data given in Exhibit 10 and cost figures above, make a recommendation for how many units of each style Wally Obermeyer should order during the initial phase of production. Assume that all ten styles in the sample problem are made in Hong Kong, and that Obermeyer's initial production commitment must be at least 10,000 units.

Exhibit 10 Sample Buying Committee Forecasts, 10 Styles of Women's Parkas \begin{tabular}{|l|r|r|r|r|r|r|r|r|r|r} \hline \multicolumn{6}{|c|}{ Individual Forecasts } & Average & \begin{tabular}{l} Standard \\ Style \end{tabular} & \multicolumn{6}{|c|}{ Price a} & Laura & Carolyn & Greg & Wendy & Tom & Wally & Forecast & Deviation & Deviation \\ \hline Gail & $110 & 900 & 1,000 & 900 & 1,300 & 800 & 1,200 & 1,017 & 194 & 388 \\ \hline Isis & $99 & 800 & 700 & 1,000 & 1,600 & 950 & 1,200 & 1,042 & 323 & 646 \\ \hline Entice & $80 & 1,200 & 1,600 & 1,500 & 1,550 & 950 & 1,350 & 1,358 & 248 & 496 \\ \hline Assault & $90 & 2,500 & 1,900 & 2,700 & 2,450 & 2,800 & 2,800 & 2,525 & 340 & 680 \\ \hline Teri & $123 & 800 & 900 & 1,000 & 1,100 & 950 & 1,850 & 1,100 & 381 & 762 \\ \hline Electra & $173 & 2,500 & 1,900 & 1,900 & 2,800 & 1,800 & 2,000 & 2,150 & 404 & 807 \\ \hline Stephanie & $133 & 600 & 900 & 1,000 & 1,100 & 950 & 2,125 & 1,113 & 524 & 1,048 \\ \hline Seduced & $73 & 4,600 & 4,300 & 3,900 & 4,000 & 4,300 & 3,000 & 4,017 & 556 & 1,113 \\ \hline Anita & $93 & 4,400 & 3,300 & 3,500 & 1,500 & 4,200 & 2,875 & 3,296 & 1,047 & 2,094 \\ \hline Daphne & $148 & 1,700 & 3,500 & 2,600 & 2,600 & 2,300 & 1,600 & 2,383 & 697 & 1,394 \\ \hline Totals & & 20,000 & 20,000 & 20,000 & 20,000 & 20,000 & 20,000 & 20,000 & & \\ \hline \end{tabular}