Ll Bean

Topics: Mathematics, Prediction, Forecasting Pages: 3 (1206 words) Published: February 16, 2013
This paper has adjusted the 5 problems that shown in this case. First paragraph is to adjust how L.L Bean uses the previous year’s demand to determine how many units of product to order. Second paragraph is to adjust how many units of item L.L Bean should purchase under the relationship between the item costs and revenues. Third paragraph is to adjust what information should Scott Sklar have in order to help him to forecast for a particular style of men’s shirt that is a new catalog item. Fourth paragraph is to adjust the method that Mark Fasold used in the case to solve the number of items purchased. Lastly, the final paragraph is to adjust the improvement that L.L Bean should do in forecast process. L.L Bean uses different determinations and calculations to forecast and decide how many units of items to stock. The first thing is using the frozen forecast, which comes from the forecasting department. Buyers, product people, and inventory buyers meet to forecast item sales by book and rank various items in terms of expected dollar sales while they assign dollars in accordance with the ranking. They have to make a judgment when there is new item added. They judge the total of forecasted item sales and check it for reality based on the book forecast by comparing the previous data. The second thing is using a calculation of A/F, which is actual demand divided to forecast demand. It helps to calculate the range of inventory that the product would be in the coming year and the frequency distribution of these errors was compiled across items. For example, assume there was a 50% forecast errors, and the new item ratio was between 0.7 and 1.6 in last year, if the frozen forecast for an item were 1000 units, so the actual demand for that item would be between 700 and 1600 units. The last thing is the calculation of profit margin. For instance, an item cost $15, and sells for $30, and the gain of selling would be $30-15=$15. If the liquidation is sold for $10, so the loss...
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