Case Study

Ace Sports
Ace Sports was established in the 1970s to manufacture sportswear and equipment. Because of stiff competition, the company initially generated only nominal profits. After 1990s, the campaign regarding healthy lifestyle began gaining ground. The sales of the company started rising steadily.

Ace Sports
Currently, Ace Sports consists of 5 departments headed by VPs who report to the president of the company. These five departments are Operations, finance, marketing, logistics, and administration. The president employs a democratic style of management, where each person has a right to comment on and recommend improvements. This, the president believes, will help the departments to work cohesively and assist each other.

Ace Sports
Ace Sports has only one plant. One hundred employees work at this plant. The raw materials are stored in the companys stores which is situated near the factory. Packed finished goods are transferred to a public warehouse situated about 100 km from the factory. From there, the products are delivered directly to the RDCs.

Ace Sports
Ace Sports distributes its products to four RDCs. One of the four RDCs, in Mumbai, holds about 50% of the market . Recently, they have informed the President, Mr. Rahul, that there are many stock out problems that has resulted into poor customer service levels and our customers are moving to competitors. Recently, Ace Sports had launched many new sportswear and had spent a lot of money on advertising, which had generated very good demand. Mr. Rahul has realized that this will threaten Ace Sports and will dramatically affect its sales. Mr. Rahul called a meeting with his VPs to discuss his concern.

Discussion
President : This shortage situation is terrible. whenever business gets good , we run out of our products and our customer service is lousy. VP Operations: I will tell you when . When we get a wrong forecast from our sales dept. VP Sales (Interrupting): Wait a min, Many times we have forecasted accurately. VP Operations : but we got a wrong forecast . By now it was too late. Now we cant do anything. VP Sales: Many times when we have forecasted accurately , we had similar stock out situation. President : I think we have to work on Materials Requirement Planning. VP Finance : Id like to be in one of these discussions. We have been burned more than once by building inventories for business upturn that doesnt happen. Then we get stuck with tons of inventory and ran out of cash.

Ace Sports
How to deal with this problem? What are different methods of forecasting? What is MRP? What is the logic of MRP? What are the inputs and outputs of MRP?