Question

1. Adidas is launching a new v-neck “Dynamic Response Short Sleeve Tee” this spring and will be running a promotion in conjunction with the launch. Your buyer has to come to you, the planner to discuss this to make sure their delivery arrives in time for the promotion of all Adidas tops beginning on March 14th. in order to make sure we know when to place the order, our company has been monitoring the Lead Time Variance.

2. (10 points) Calculate The Vendor’s Lead Time Variance from the table below.

You have the following information: Vendor’s Lead Time Forecast 30 days

Vendor’s Shipping History

Period	Planned Receipt Date	Actual Receipt Date	Variance in Days
1	15-Oct	30-Oct
2	30-Oct	31-Oct
3	15-Nov	22-Nov
4	30-Nov	7-Dec
5	15-Dec	18-Dec
6	30-Dec	5-Jan
7	15-Jan	19-Jan
8	30-Jan	6-Feb

2.            Vendor’s Lead Time Variance in Days ___________

3.          Vendor’s LTV as a % _____________

4.          To ensure on-time delivery, place order ____________

5.          The earliest date to expect receipt ________________

6.           Place order_______ Earliest Receipt Date __________ Start date of promo___________

G) Explain why it is important to take LTV into consideration when creating planned orders? use all three dates from your timeline above in your answer as well as the variance in days for the first shipment listed in the table. Imagine that you are expecting this to someone who is unfamiliar to this concept. Your answer must be clear

Answer 1

Facts of the case : Vendors' lead time forecast 30 days . If adidas wants to start promo on March 14, order should be placed on February 12 . However there is a lead time variance as per table below

	Planned receipt	Actual receipt	days variance
1	15-Oct	30-Oct	15
2	30-Oct	31-Oct	1
3	15-Nov	22-Nov	7
4	30-Nov	07-Dec	7
5	15-Dec	18-Dec	3
6	30-Dec	05-Jan	6
7	15-Jan	19-Jan	4
8	30-Jan	06-Feb	7

the largest variance is 15 days and the max. no .of times, the variance has been 7 days . The average (mean) of LTV is 6.25 days and the median LTV is 6.5 days.

Hence we should add 7 days to the lead time of 30 days and place the order on February 5 to get the order on March 14. Since promo is to start on March 14, it will help to have a small buffer of 5 days - hence place order on Feb 1 to get it on March 9 and start promo on March 14

2. It is important to take LTV into account as there are forseen and unforseen delays in fulfillment of orders . Some of the foreseen delays could be delays in procurement of raw materials, machine breakdowns etc , labour shortage, etc. Unforseen could be weather issues , acts of God, accidents etc which disrupt the supply chain. Hence while we plan with LT indicated by the supplier , we must take into account LTV. Here the variance average is around 7 days , however the first order was delayed by 15 days. We must assess and analyse the reasons for the same and understand if somethig like this could happen.