Charles River JazzSell CD’s of Friday PerformancesThe ASYNC “givens were ‘static”:–Saturday & Sunday attendance = 51,824–% buyers = 8%–Initial Press = 4000Simulation analysis would have helped us to explore key dimensions:•Saturday and Sunday attendance forecast•Percentage of buyers•Profitability by running hundreds of permutations30
Kenan Stadium – Inventory•What are Adrian’s inventory considerations? What inventory model is he using? •Why does Adrian build a cushion into the quantity of hot dogs he orders? What impacts the size of the cushion?•Why do inventory policies for bottled water differ from those for hot dogs?33
Callaway GolfProduct dynamics•Premium•Seasonal•Tight sales windows, usually spring and summer•Next product ‘edition’ makes current product obsolete34How to manage inventory?
Callaway Golf35Inventory Drivers- Merchandising inventory (retail outlets and on-line)- Pricing vs buying segmentsPriceMonthsPrice Point 2:On sale: Target: General golf communityPrice Point 1:Full PriceTarget: Latest and greatest buyersPrice Point 3:Clearance: Target: Lagging buyers
Callaway’s Hope36PriceMonthsPrice Point 2:On sale: Target: General golf communityPrice Point 1:Full PriceTarget: Latest and greatest buyersPrice Point 3:Clearance: Target: Lagging buyersMaximize Sales to this segmentATTRACT AND PULL
Key Learning:Even if you can’t eliminate uncertainty (aka risk), you can assess its effect on the decisions you need to make-Fixed Costs-Sunk Costs (gone)-Variable Costs37