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

Free cash flow, Hi, I''m looking for a tuttor that can help analysing free ...

Hi, I''m looking for a tuttor that can help analysing free Cash flow for a Company - for an exam I''m preparing for.

How does an operating lease compare with a financial lease, Problem: (a...

Problem: (a) Distinguish between Non-Deposit Taking and Deposit-Taking Institutions. Provide two differences between the two types of institutions. (b) Who regulates Depos

Top - down methods, For a large set of SKUs and in two successive selling s...

For a large set of SKUs and in two successive selling seasons, we have compared the accuracy of three quantitative forecasting methods based on advance (preview) demand information

What is the value of equity of alpha, Two firms, Alpha and Beta, are in the...

Two firms, Alpha and Beta, are in the same business and size and identical in all respects except the way in which they have financed their assets. If the economy does well in th

IRR & WACC, I have been given 3 different types of projects. They state th...

I have been given 3 different types of projects. They state the IRR and how much the project will add. The question goes on to give a WACC with break points. The question wants

Cost of Capital, Calculating Cost of Equity. Bohannon Corporation''s common...

Calculating Cost of Equity. Bohannon Corporation''s common stock has a beta of 1.10. If the risk-free rate is 4.5% and the expected return on the market is 12%, what is the company

Base case npv, just to be absolutely clear, is this the cash revues less th...

just to be absolutely clear, is this the cash revues less the cost of the project less the initial outlay. Could you provide me with the makeup?.

Interest Rates and Bond Valuation, Bond J is a 4 percent coupon bond. Bond ...

Bond J is a 4 percent coupon bond. Bond K is a 12 percent coupon bond. Both bonds have 8 years to maturity, make semiannual payments and have a YTM of 7 percent....what are the mon

INVESTMENT DECISION, You are a ceo of a sotware firm that has limited acces...

You are a ceo of a sotware firm that has limited access to debt equity markets. The average return on last year projects is 28 % . and cost of capital is 12%. would npv pr Irr be

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