9(.08*112.50). This is one example detailing the fashion gamble that Sport Obermeyer undertakes for every inventory line. Last year, almost a third of Obermeyer's parkas had been made in China, all by independent subcontractors in Shenzhuen. This year, the company planned to produce half of its parkas in China, continuing production by subcontractors and starting production in a new planet in Lo Village, Guangdong. The new facility would eventually provide jobs, housing, and recreational facilities for more than 300 workers. This facility was Obersport Ltd first direct investment in manufacturing capacity in China. The downfall of producing in this new facility was the ability of predicting the demand, worker skill levels, and productivity levels. Obermeyer should not increase the amount of production in China by such a large amount. Instead the adjustment should begin by 10% increments to test the reliability of the factories' operation. This enables Obermeyer to take effective approaches in resolving existing operation issues in the new facility.The allocation of operations to workers differed from one factory to another depending on the workers' level of skill and the degree of workers cross-training. Workers in Hong Kong worked about 50% faster then their Chinese counterparts. In addition to being more highly skilled, Hong Kong workers wee typically trained in a broader range of tasks. Thus, a parka line in Hong Kong that required 10 workers to complete all operations might require 40 workers in China. Longer production lines led China to greater imbalance in these lines. Workers were paid on a piece-rate in both China and Hong Kong: the piece rate was calculated to be consistent with competitive wages rates in the respective communities. Wages in China were much lower than in Hong Kong; an average sewer in a Guangdong sewing factory earned US$0.16 per hour compared with US$3.84 per hour in the Hong Kong factory. The W...
