Ll Beans Essay

831 Words Jun 2nd, 2012 4 Pages
LL Beans

Please submit your analysis of this case. In addition, be prepared to discuss your analysis in
class.
1. How significant (quantitatively) of a problem is the mismatch between supply and demand
for LL Bean?
As per the historical series and its associated statistical description (see graph below), we can observe that there is a significant spread between the A/F ratios sine the standard deviation equals 1/3 of the mean. Besides in cases, there is mismatch beyond 50% between the forecast and the actual demand. Besides the mean value shows that there is a 9% bias meaning that on average the actual is always 9% above the forecast. It should be noticed as well that there distribution is skewed to the left with higher values
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the Cu/(Co+Cu) ratio).
• There is a grey area in the case to know how LL Bean really assesses the number of actual for products generating a demand higher than the forecast. An overestimation of lost sales can create a bias loop since it will impact the next year order commitment by generating mechanically higher commitment orders. As per the mean (8% above 1) and the distribution that is skewed to the left, it could be inferred that there is a systematic overestimation of lost sales which may explain that there are not different common pattern across items and buyers.
• We can’t suggest any bias due to outlier since they mention that there have not found any specific pattern.
• The split between “new” and “never out” for the historical errors makes sense since both nature of articles share a common property.
• We recommend making use of the phone calls and orders through all selling channel to build more robust analytical data and reduce the potential bias of data used to build the A/F distribution.

4. What do you think about LL Bean’s forecasting process? Is that the best that they can do?

Problems
• It seems unreliable and not data driven as per the use of rules of thumb and use of consensus that may reduce the weight of the expert.
• Forecast reconciliation issue with the bottom up (items by…

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