This preview shows page 1. Sign up to view the full content.
Unformatted text preview: ortunately, we cannot be certain what your competitors will do. Therefore, we must manage two risks: 1. Stocking out. If we run out of inventory, we give our customers and our profits to competitors. 2. Carrying too much inventory. We pay for inventory out of cash. If too much ends up in the warehouse, we could run out of cash and take an emergency loan. Where do we get the data to plan a production schedule? The Team Member Guide, the FastTrack, and our marketing forecast. The Team Member Guide discusses production in section 4.3. The FastTrack offers starting inventory and capacity constraints on the Production page. In Tactic 3 Marketing, we entered a pessimistic sales forecast. We said something like, “In our worst case, we believe we can sell 900 thousand units of Able.” But if 900 thousand units is our worst case, what is our best case? We would like to have enough inventory to satisfy our best case. Otherwise we stock out. Suppose we decide our best case is 1200 units of Able, and that we ha...
View Full Document
- Fall '06
- Business, Foundation Report