Ll Bean Inc Item Forcasting and Inventory Management Essays

1260 Words 6 Pages
Executive Summary
Organizational Profile L.L. Bean Inc. was established in 1912 by Leon Leonwood Bean. He obtained a list of nonresident hunters to establish his first client list for his mail order business. His golden rule for the company is “Sell good merchandise at a reasonable profit, treat your customers like humans beings, and they’ll always come back for more.” In 1967 when L.L Bean died, his mail order business had grown to $4.75 Million in annual sales, the catalog was distributed to 600,000 customers, and employed 200 people. Since his grandson has taken over the company as of 2010 annual catalog and retail store sales are $1.44 billion. The company just in one year had 11 million customer contacts received and regular,
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It assumes that the past is a good indicator of the present and future. It statistically analyzes three main components basic values, trends, and seasonality to construct a projection of future demand using these three components. CON’s
Alternative 2 Another way to improve is to implement some type of qualitative forecasting method. This method is more intuition based than mathematical. In many instances, especially those that feature rollouts of unique products, statistical models can provide inadequate results because they don’t have enough past data to make an accurate prediction of future demand (Greene, 2012). This is where human expertise enters into the process. The buyers at L.L. Bean have this expertise and knowledge to take into account the factors that statistical models cannot turn into mathematical equations.
The only problem that could arise by using this forecasting model is if the buyers at L.L. Bean made a mistake in their forecasting methods. All humans make errors no one is perfect. You would need some way for them to justify why they have decided to order this amount and how they came up with the amount they have chosen to order. Then have an upper team member or another division double check and approve the order if their numbers seem to be correct.
Critical Issue 2
Mark Fosold, Vice President- Inventory Management is worried about the wide dispersion in forecast

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