Accuracy of initial forecast, Corporate Finance

Assignment Help:

The bulk of products is produced in South East Asia, and hence the lead time to Western retailers is long. The typical lead time from fabric manufacturers is 3 months (Gutgeld and Beyer, 1995). The speci?c mail order company that we study faces lead times of 6-14 weeks. Long lead times dictated by powerful suppliers and strong competition fromother retailers trying to secure enough production capacity force retailers to commit to initial order quantities long, usually several months, before the start of the selling season. We remark that there are a few well-known apparel/fashion retailers like Zara and Hennes & Mauritz that have deviating strategies based on local manufacturing. However, for the large majority of apparel retailers, who have a low-cost focus and often sell private label products, the situation is as we described.

So, formost products that an apparel retailer sells in any season, a demand forecast is needed well before the start of the season, when no historic demand data is available. An apparel retailer's success hinges to a large extent on the accuracy of those preseason forecasts on which the initial orders are based. These initial orders comprise the bulk of the total volume ordered (Fisher and Raman, 1999).

Additional in-season replenishment opportunities, if available, are essentially emergency replenishment opportunities and only serve to prevent shortages resulting frompossible initial underestimation of demand. We refer interested readers to Mostard and Teunter (2006) for a further discussion and analysis of inventory control issues. In this paper, the focus is on forecasting.


Related Discussions:- Accuracy of initial forecast

Why the discount rate equals opportunity cost of capital, Question: (a)...

Question: (a) Describe why the discount rate equals opportunity cost of capital? (b) "Nominal rate less inflation rate is equal to real rate of return" - Is it true? Why or

Fundamentals of Corporate Finance, What is the industry average price-earni...

What is the industry average price-earnings ratio? What is the price-earnings ratio for Ragan, Inc.? Is this the relationship you would expect between the two ratios?

WACC, WACC calculation

WACC calculation

Marginal cost of ?rm at equilibrium, Problem: Firm 1 produces cars and the ...

Problem: Firm 1 produces cars and the total cost of producing q cars is given as C(q) = 2q 2 + 5q. a) Assuming the ?rm operates in a perfectly competitive market. Write down th

Financial management, determine the pay \back period for the project.

determine the pay \back period for the project.

Compxm exam, can you assist with the all the rounds in compxm exam?

can you assist with the all the rounds in compxm exam?

D, differentiate between allocative efficiency and pricing efficiency

differentiate between allocative efficiency and pricing efficiency

Mergers had on fees assessed for retail bank services?, What effects have m...

What effects have mergers had on fees assessed for retail bank services? A: The impact is not clear. Market conditions and the level of competition often determine the cost for

motives-valuation-financing-recommendations , 1. Motives - This section sh...

1. Motives - This section should include a detailed discussion of the main motives for the proposed acquisition supported by the latest academic literature and advances within the

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd