Catalog L.L Bean Case

L.L Bean is a huge catalog business that has difficulties to match demand with supply of the items they are stocking. This creates total cost for the company of $21 million (11 million in understocking and 10 million in overstocking.). They face these problems because they are wrongly forecasting the demand because they have different demand for different types of products. L.L Bean places their orders to suppliers at least twelve weeks before customers receive catalogues because usually production time is 6-8 weeks long. This creates huge problem because if their forecasts are wrong there is a big chance that purchases will exceed the stock. Forecasting problems are very important for L.L Bean because they cost them a lot of money and it is possible threat that could lead to customers dissatisfaction. Golden rule of this company is" sell good merchandise at a reasonable profit, treat your customers like human being and they will always come for more" gives us a clue how customer satisfaction is important to this company and this is one of reasons why they need to find solution for their forecasting problems. The main issue is that if they are out of stock they might lose customers while on the other hand if they overstock they need to liquidate items which is again against their philosophy "sell good merchandise at a reasonable profit". In my analysis of the case study I have provided several useful tools that could help them in reducing forecasting mistakes.L.L Bean is a huge catalog business that has difficulties to match demand with supply of the items they are stocking. This creates total cost for the company of $21 million (11 million in understocking and 10 million in overstocking.). They face these problems because they are wrongly forecasting the demand because they have different demand for different types of products. L.L Bean places their orders to suppliers at least twelve weeks before customers receive catalogues because usually