LL Bean, Inc: Item Forecasting and Inventory Management

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Compact case

Case

Reference no. 9-893-003

Subject category: Production and Operations Management

Authors: Arthur Schleifer Jr (Harvard Business School)

Published by: Harvard Business Publishing

Originally published in: 1992

Version: 7 September 1993

Length: 5 pages

Data source: Field research

Topics: Order processing; Managing uncertainty; Forecasting; Inventory management; Risk management; Direct marketing

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Abstract

LL Bean must make stocking decisions on thousands of items sold through its catalogs. In many cases, orders must be placed with vendors twelve or more weeks before a catalog lands on a customer's doorstep, and commitments cannot be changed thereafter. As a result, LL Bean suffers annual losses of over USD20 million due to stockouts or liquidations of excess inventory. Provides a context in which buying decisions that balance costs of overstocking and understocking when demand is uncertain are made and implemented on a routine basis.

Location:

Maine

Size:

USD600 million revenues

Other setting(s):

1991