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    Group 5 - SCM - LL Bean

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    Siddharth
    LL Bean Inc is a 112-year-old company that started as a small hunting shoe business. It has since grown to $528 million in sales by 1991 through its catalog and growing store business. The company follows the golden rule of selling good merchandise at reasonable profits while treating customers well. It uses historical forecast errors and the distribution of past errors to determine individual item quantities by balancing contribution margins and costs of buying, selling, and liquidating inventory.

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    Group 5 - SCM - LL Bean

    Uploaded by

    Siddharth
    66 views8 pages
    LL Bean Inc is a 112-year-old company that started as a small hunting shoe business. It has since grown to $528 million in sales by 1991 through its catalog and growing store business. The company follows the golden rule of selling good merchandise at reasonable profits while treating customers well. It uses historical forecast errors and the distribution of past errors to determine individual item quantities by balancing contribution margins and costs of buying, selling, and liquidating inventory.

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    operations

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    Group 5_SCM_LL Bean

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    LL Bean Inc is a 112-year-old company that started as a small hunting shoe business. It has since grown to $528 million in sales by 1991 through its catalog and growing store business. The company follows the golden rule of selling good merchandise at reasonable profits while treating customers well. It uses historical forecast errors and the distribution of past errors to determine individual item quantities by balancing contribution margins and costs of buying, selling, and liquidating inventory.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    66 views8 pages

    Group 5 - SCM - LL Bean

    Uploaded by

    Siddharth
    LL Bean Inc is a 112-year-old company that started as a small hunting shoe business. It has since grown to $528 million in sales by 1991 through its catalog and growing store business. The company follows the golden rule of selling good merchandise at reasonable profits while treating customers well. It uses historical forecast errors and the distribution of past errors to determine individual item quantities by balancing contribution margins and costs of buying, selling, and liquidating inventory.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 8

    LL Bean Inc

    Group 5: Jinesh Rambhia (PGP10225)


    Siddharth Gautam (PGP10233) Rohan Kamath (PGP10167) Gaurav Garg (PGP10203)
    Santosh Mishra (PGP10228) Prashant Kumar Tanvi Karguppikar (PGP10242)
    1912- Leon Leonwood Bean Invented the Maine Hunting Shoe
    1967- LL Bean died and the business was $4.75 Million and
    600000 mailing list
    1967- Leon Gordman decided to modernize
    1986- Installed phone order ‘800”
    1991-$528 million by mailing order and $71 million store sales
    1991- 80% orders by telephone orders
    Timeline of
    Progress
    Golden Rule of Business
    Sell of good merchandise at reasonable profit
    Treat customers as human being for retention

    2
    Specific Item
    Forecasting

    3
    • Firstly historical forecast errors (expressed as A/F ratio of
    actual demand to forecast demand)
    • The frequency distribution of past forecast errors was then
    used as a probability distribution for the as yet unrealized
    future forecast errors
    • Each item’s commitment quantity was determined by

    Item costs and balancing the individual item’s contribution margin

    revenues are Summary


    relevant to Stock a. The buying cost of item
    b. The selling price of item
    c. Liquidation cost of item
    • Number of different items in stock
    • Actual and forecasted demand for the new item
    • Inventory cost for that, commissions have provided for sales,
    Information stock outs and backorders cost
    for demand • Existing market trends for that new item
    forecast • Level of buffer stock he should have to avoid stock outs by
    matching stock out costs and over-stocking cost
    • Cannibalization of existing product by launch of new

    5
    • L. L. Bean inc. Takes into account the cost of
    overstocking, but not the cost of understocking
    • It compares the cost of overstocking with the profit it
    makes by selling ( Overstocking loss is $5 where as
    UnderStocking understocking is $15)

    - Mark’S • It should compare the cost of overstocking with the cost


    of understocking
    Concern • As the cost of understocking is more than that of
    overstocking
    • Demand usually exceeds the forecast quantity
    • Solution to order higher quantity
    ◦ Fashion industry is a fast-changing industry and product
    demands change very rapidly
    ◦ Updating their forecasts based on latest data as well.
    ◦ Experts in the whole process, with experts and the data
    combined they would be better able to forecast.
    Improving ◦ L.L bean should try to introduce catalogues earlier so that
    the demand could be more easily assessed
    Forecasting process ◦ Better insights inside the consumer behaviour and thus
    predict demand in a better way
    ◦ Long-term plan should be to reduce dependence on foreign
    vendors and have more local vendors who can supply
    quickly
    ◦ L.L bean can plan a second order too based on the new
    forecast.

    7
    THANK YOU

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