Econ Case Study
Econ Case Study
Econ Case Study
A retail company is unsure about the demand for its products in their upcoming holiday
season. Without accurate demand forecasts, the company risks overstocking
inventory and incurring holding costs or underestimating demand and missing out on
potential sales opportunities. Managers need to develop robust forecasting models based on
historical data, market trends, and consumer behavior to optimize inventory levels and
maximize profitability.
The retail company is concerned about the demand for its products during the next
holiday season. Without precise demand estimates, the company risks overstocking goods,
incurring holding expenses, or underestimating demand, resulting in missed sales
opportunities. To optimize inventory levels and maximize profitability, managers must
create robust forecasting models based on historical data, market trends, and customer
behavior.
The Problem
The primary issue confronting the retailer is the absence of precise demand projections
for its merchandise throughout the forthcoming holiday season. There are two major problems
that this uncertainty can cause:
Overstocking Inventory: If a business overestimates its needs, it could find itself with too
much inventory, which could result in higher holding costs and even losses.
Gather Information
To address the problem, the company needs to gather relevant information, including:
Case Analysis
Historical Sales Data Analysis: Analyze historical sales data to identify patterns, trends,
and seasonality.
Market Trends and Consumer Behavior Analysis: Analyze market trends and consumer
behavior to understand how they may impact demand during the holiday season.
SWOT Analysis
Strengths:
Weaknesses:
Opportunities:
Threats:
Political:
Technological:
Alternative Solutions