Case | HBS Case Collection | October 1992 (Revised September 1993)

L.L. Bean, Inc.: Item Forecasting and Inventory Management

by Arthur Schleifer Jr.

Abstract

L.L. Bean must make stocking decisions on thousands of items sold through its catalogs. In many cases, orders must be placed with vendors twelve or more weeks before a catalog lands on a customer's doorstep, and commitments cannot be changed thereafter. As a result, L.L. Bean suffers annual losses of over $20 million due to stockouts or liquidations of excess inventory. Provides a context in which buying decisions that balance costs of overstocking and understocking when demand is uncertain are made and implemented on a routine basis.

Keywords: Forecasting and Prediction; Risk Management; Cost Management; Risk and Uncertainty; Demand and Consumers; Order Taking and Fulfillment; Retail Industry; United States;

Citation:

Schleifer, Arthur, Jr. "L.L. Bean, Inc.: Item Forecasting and Inventory Management." Harvard Business School Case 893-003, October 1992. (Revised September 1993.)