LL BEAN CASE ANALYSIS

GROUP 11
Raunaq Walia- 2022PGP453
Hyder mundoly- 2022PGP624
Sushant Mandaokar- 2022PGP583
Gautam Krishna- 2022PGP140
Chinmay Sharma- 2022PGP113
Bhavank Tamakuwala- 2022PGP588

INTRODUCTION:
Mr. Bean launched the company in 1912. It features a superior selection of bags, clothing,
footwear, luggage, and outdoor gear. Around 1991, they received a sizable order over the
phone that was 80% of their total sales. It established a national mail order company and
was a significant supplier of sports and outdoor equipment.

COST AND REVENUE: Cost of Goodwill lost

No Stock Situation
Demand persisting in the
market
Cost of Goodwill lost
Excessive Stock-end of Season
Buying costs from vendors
Carrying costs
Marketing costs and salvage cists

FORECASTING METHODS:
• List the things that need to be forecasted.
• Sort them in order of expected value.
• Consult an expert to forecast its demand.
• Calculate the forecasted errors.
• Create a distribution of frequencies.
• If the forecast's 50% inaccuracy falls between 0.6 and 1.7, it is modified.
• Find the underage and overage costs that are underlying.
• The CM and Salvage values for each item are determined. 0.5 is the critical ratio.
• 1.3 times frozen demand provides us the ideal stock level.

The problem was wide dispersion in forecast error for never out items and new items.
OPERATION:
• To avoid diluting business ideas, there is only one retail location (at Freeport).
• For domestic orders, the normal wait time was 8 to 12 weeks.
• A second order would be placed under the "QUICK RESPONSE" plan and would be
delivered in time to satisfy the late-season demand.
• Each catalogue takes nine months to create and involves specialists in merchandising,
design, products, and inventories.
The issues were mainly:
Wide variation in forecast errors for "new" and "never out" products. The contribution
margin and liquidation cost estimates were off. Consequences of the technique. If the
cost of understocking is greater than the cost of overstocking, the projection will be
more than frozen. The organisation knows very little about new things, and the excess
above the frozen prediction is considerably bigger than for never-outs.

SOLUTIONS:
• Remember that forecasts won't always be accurate.
• To enhance your forecasting techniques to forecast demand more accurately over
time.
• A thorough cost-benefit analysis of the expenses incurred during the liquidation
of unsold inventory and the expenses incurred in the event of stock outs.
• Before coming into the markets, introduce them in the catalogues.

SOLUTION FOR NEW ITEMS:

• For recently introduced new items, gather historical data as well as predictions.
• Learn about the selling price.
• Collect data on sales, commissions, stock shortages, and backorders.
• Compare your product's sales to those of your rivals.
• Keep enough buffer stock on hand to prevent stock outs.
• Promote the product and its price.
• Based on the computation of the profit margin, decide the service level.
• Compare the introduction of new products to previous ones.

SOLUTIONS FOR NEVER OUT ITEMS:

• Utilize qualitative forecasting techniques to look for potential wants.
• Enable the possibility of a second order from the buyer by floating the catalogue.
• Have a modest vendor network, but a solid relationship, since this will reduce the
lead time and encourage additional purchases.