Case: Pepe JeansPepe Jeans began manufacturing and selling denim jeans in the early 1970s in the United Kingdom and achieved tremendous growth. The company maintains contact with its independent dealers through a team of 10 agents and each agent is responsible for dealers in a particular area of ​​the country. Pepe believes that a good relationship with independent retailers is vital to his success. The survey of independent retailers highlighted some problems. Pepe's variety of styles and quality was believed to be the company's primary advantage over its competitors. However, the independents were not satisfied with Pepe's request to place firm orders six months in advance without the possibility of modifying, canceling or repeating the order. Some said the inflexible ordering system forced them to order less, resulting in stockouts. Pepe felt that a change would soon be necessary. The simplest solution would be to work with the Hong Kong sourcing agent to reduce the lead times associated with orders, but this would have increased costs significantly. Even with the significant increase in costs, it would be difficult to maintain consistent delivery schedules. Another suggestion was to build a finishing business in the UK. Pepe was interested in seeing how the system worked in US operations. They found they would need to keep around six weeks' supply of basic jeans on hand in the UK and needed to invest £1,000,000 worth of equipment. They also estimated that it would cost around £500,000 to run the facility each year. They could place the facility in the basement of the current office building and the renovation would cost £300,000. Today, many companies outsource operations management. Companies have... half the paper... a Dell computer, a Microsoft computer, and a Cisco System - and oh, by the way, we have $2 billion left after that."• 35: The number of Wal- supercenters Mart in China. • $15 billion: The amount of Chinese products Wal-Mart estimates it imports each year. Others suggest the number could be higher. • $120 billion: The U.S. trade deficit with China in 2003. • 8; percentage: The amount of total U.S. retail sales, excluding automobiles, accounted for by Wal-Mart. • $9.98: The average full-time hourly wage for a Wal-Mart employee. The average full-time hourly wage in metropolitan areas (defined as areas with a population of 50,000 or more) is $10.38 in some urban areas is higher: $11.03 in Chicago, $11.08 in San Francisco and $11.20 in AustinReference:1) Always Low Prices by Sam Hornblower2) Secrets of Wal-Mart's Success www. .pbs.org3) http://www.michaelbergdahl.net