Product Overview

Joe Smith, senior director of merchandise management at Beautiful Bags (BB), was about to place a large order for the upcoming winter season. He had to decide how many pieces he should order of each product. But another big question whether BB should source the product from its domestic manufacturing facility, its Chinese suppliers, or some combination of the two given the timing needs, labor costs, minimum order requirements, and BB's expanding product assortment?

Learning Objectives

• Determine order quantities given three options: a periodic-review model, a newsvendor analysis using reactive capacity, and a make-to-order strategy. • Determine the lowest-cost option and make a recommendation for three different SKUs.