Methods based on advance demand information, Corporate Finance

We consider three methods based on advance demand information. Each of these methods ?rst forecasts total season demand in the upcoming season, denoted by M, for a group of SKUs N by scaling up the registered advance (preview) demands for those SKUs, and then divides this forecasted group demand over the individual SKUs. The scaling up factor is calculated as the ratio of ?nal demand to preview demand for a ‘comparable' group of SKUs (e.g. t-shirts), denoted by H, in one or more historical seasons.

1482_Methods based on advance demand information.png

Using notation Pn for the preview demand in the new season for SKU n 2N;H for the number of SKUs in H;R for the preview demand in the historic season(s) for SKU h 2 H, and Sh for the total demand in the historic season(s) for SKU h 2 H, this gives

So given preview demand, we forecast total demand by assuming that the ratio of total demand to preview demand will be the same as in past season(s) for a comparable group of SKUs.We remark that this forecast could be modi?ed if additional information on e.g. the economical situation or meteorological conditions were available.

All methods can be applied for any choice of grouping. Intuitively, it makes sense to group SKUs in such a way that the SKUs in N have similar product characteristics as the SKUs in H. Note that in order to obtain a decent estimate of M, it is required that SKUs in historical season(s) can be found that bear suf?cient resemblance to the SKUs in N. In our numerical investigation, we will consider several ways of grouping in line with classi?cations used by the case company. Collections change every selling season to follow the latest fashion and trends. Hence, there will generally be no overlap between H and N, although there might be a group of generic SKUs that are carried over from one season to the next. While individual SKUs change, the de?nitions of groups and the classi?cation of SKUs into these groups do not change.

Posted Date: 4/25/2013 5:31:40 AM | Location : United States

Related Discussions:- Methods based on advance demand information, Assignment Help, Ask Question on Methods based on advance demand information, Get Answer, Expert's Help, Methods based on advance demand information Discussions

Write discussion on Methods based on advance demand information
Your posts are moderated
Related Questions
I have done most of my work on need someone to complete the rest. Deadline is this sunday. Can i get help on that?

International Finance - Determine the sources of Foreign Capital? 1. Determine the sources of Foreign Capital? 2. What are the reasons that evaluate foreign Project? 3. D

impact of real and nominal discount rates in capital budgeting

Baobab rolling mills owns a lathe machine which was purchased 10years ago at sh. 75 million. The machine had an expected life of 15 yrs at the time it was purchased, and management

The Vodafone Corporation arranged a one-year, $1.5 million loan to fund a foreign project. The loan was denominated in Euros and carried a 10% nominal rate. The exchange rate at

Determine current stock price: 1) IBM issued 10-year bonds with a par value of $1,000 and a coupon rate of 10%, paid semiannually. The yield to maturity on this bond is 12%.

Problem: (a) Describe the term "Value Management" and what are the related benefits in applying such principles in a project?  In your opinion, how will Value Management

A owns all of the stock of X.  The stock's basis is $100.  X has a total of current and accumulated earnings and profits of $50.  X distributes $200 cash to A "with respect to his

Question: In view of its international operations management, Remo Ltd which is based in USA expects to make a payment of £ 50,000 to a UK supplier for raw materials in six mon

what will be impact on the operating leverage of a firm if it proceeds for additional borrowings