![]() This ordering pattern has fulfilled the MoQ requirement and has also kept the risk of both lost sales and excessive inventory to a minimum.Īlso, it is recommended that future forecast operation shall be in the same way, that is, the managers provide their data separately, which is then analyzed and finalized at a later stage. This would help in mid-season adjustment in case there is an unexpected shift in the buying pattern of the end-users. However, as the sales history has already shown that customers’ perceptions and buying patterns are highly influenced by the festival in Vegas therefore, only 50 percent of the total expected sales are ordered initially. Hence, this will not result in discounted sales and loss to the company. Since it is known that forecast of styles with minimum deviations is also backed up by their good sales history therefore, it can be assumed that they will not generate any extra merchandise at the end of the season. Since the standard deviation of the last 5 styles was above 400, the recommended order quantity for such styles is below their respective averages. Styles having a standard deviation below 400 are ordered as close to their average forecast as possible. (Ignore price differences among styles in your initial analysis.)Įven though a lot of differences exist in the forecast of different managers however, to incorporate the data coming from them and also reflect it in the ordering process, the recommended cut-off for standard deviation is set at 400. Assume that all of the ten styles in the sample problem are made in Hong Kong and that Obermeyer's initial production commitment must be at least 10,000 units. ![]() Using the sample data given in Exhibit 10, make a recommendation for how many units of each style Wally Obermeyer should order during the initial phase of production. ![]()
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