Ll Bean Case

L.L. Bean, Inc.

1. What item costs and revenues are relevant to the decision of how many units of that item to stock?

To know the decision of how many units we need to have in stock, we need to know 3 things very important and essential:

• The first one is that we have to know the cost of over stocking, this can be define by the price per unit of this unite

• Then, the second one is the cost of under stocking. This one is the benefit that we can sale this item

• Finally, we have to know the price of the liquidated item.

To conclude, if the company has all the decision to find the profit, which is generated by each item, they will sale and their loss per item when the company is liquidated.

2. What information should Scott Sklar have available to help him arrive at a demand forecast for a particular style men's shirt that is a new catalog item?

It's a new item, so it's any data we can rely on; as a new product launch, a market research has to be done, in this case, it should be based on the men shirt.

In this measure, we should know approximately how many shirts we have to order and be more precise in our stock for this point.

3. How would you address Mark Fasold's concern that the number of items purchased usually exceeds the number forecast?

You don't have to stock out of an item when you have an inventory too high, so it' more beneficial for the company.

Their actual problem it's their don't have an stock as important as he should be to respond to the demand, by the way, the under stocking cost his more important than the overstocking one.

Mark Fasold is concern about his suppliers thinking the company forecast to high about the real demand, it should be better for the company to forecast more though; the company has to be reactive and to answer to the supplier's demand, if they're not abler to do that, the customer must go to an another company more competitive.

The firm