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Sportstuff Case Study Solution

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Case background SportsStuff.com is a typical e-business venture using a business model similar to Amazon. Suppliers were divided into three kinds; the family with used equipment, the manufacturers and retailers which furnish surplus equipment. SportsStuff purchase from them and hold inventory in warehouse in the outskirts and sell on a web-based storefront. The innovative idea was well received in the marketplace, demand grew rapidly, demand had grown by 80 present in previous year. Therefore, if demand continued to grow and the supply chain network was not redesigned then the costs will grow faster than revenue and the other issue is that SportsStuff need more warehouse space to cope with the demand growth. Demand in 2007 is as shown in …show more content…

Louis is small so the capacity of the current warehouse is 2,000,000 units per year, more than enough to supply 2007’s demand. Moreover, if demand increased by 80precent per year in next year, the total demand is 2,565,000, the current warehouse in St. Louis is not enough to cope with the rapid demand growth. Therefore, SportsStuff need to lease more warehouse. Major problem The major problem should be SportsStuff lack of warehouse space to cope with the demand growth. SportsStuff just had one warehouse in the outskirt and the risks of natural disasters that can cause a huge interruption to SportsStuff because all the inventory in the warehouse and it will causing seriously impact in supply chain. Therefore, SportsStuff should lease somewhere to increase warehouse space and which one will be lower cost. Alternatives & Analyze For the first problem SportsStuff lack of warehouse space, there are 2 options, one option was to lease more warehouse space in St. Louis. Other options included leasing warehouse all over the country. Four potential location for warehouse were identified in Denver, Seattle, Atlanta, and Philadelphia and divided small or large size of warehouse. zone 2008 demand shipping …show more content…

Louis warehouse and for a single large warehouse in Atlanta. Total shipping cost $5,082,976 Total holding cost $3,271,249 Warehouse cost $3,002,120 Total shipping recoup $6,232,950 Total cost $5,123,395 Recommendation According to the "analysis" section, we can see that the total cost of option 1 is lower in 2008 and the total cost of scenario 2 is lower in 2008 and 2009. We can see that the sum of the warehouse and inventory costs in scenario 1 is lower and the transportation cost of scenario 2 is lower. This is mainly due to the differences in the efficiency and responsiveness of the two supply chain networks. So we recommend SportStuff. Com should choose option 2, which is in Seattle, Denver, St. Louis, Atlanta, and Philadelphia and other places to rent a small

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