A Case Study on Managing Growth at Sportstuff.Com

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A CASE STUDY ON MANAGING GROWTH AT SPORTSTUFF.COM

A group case report during the class
IOM 581 – Supply Chain Management
Prof. Sosic Greys

UNIVERSITY OF SOUTHERN CALIFORNIA
SPRING 2013

SportStuff.com
SportStuff.com was founded by Sanjay Gupta in 1996. This business supplied sports equipment for children. Children tend to outgrow their size in no time. Hence, parents had to discard the sports equipment every now and then. SportStuff.com sold used equipment from other customers and surplus equipment from manufacturers over the Internet. Sanjay received enough capital from venture capitalists and could offer a wide variety of products. As the demand began to grow rapidly, Sanjay had to come up with new strategies for warehousing. Initially starting with one warehouse in St. Louis, he had to lease more space within the same warehouse to meet the demand. Demand has been growing rapidly since 1999 and Sanjay needed a new plan. He has a few options including leasing more warehouse space in St. Louis or finding other potential locations across the United States. The next 3 years were predicted to have a growth rate of about 80% per year. A serious supply chain redesign was needed soon; otherwise costs would far exceed the growing demand and revenues.
Leasing a warehouse involves fixed and variable costs. Fixed costs are based on the size of the warehouse itself. Variable costs depend on the actual quantity that was shipped through the warehouse. Additionally, he can rent small and large warehouses in various locations, which have different costs. Costs for inbound shipment from suppliers were considered to be the same for any warehouse configuration. The four potential locations selected were Seattle, Denver, Atlanta and Philadelphia (in addition to St. Louis).
In this case study, a cost-capacities-demand model of these locations is studied to determine the…...

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