3 ms·
The issue is that if you OVERSHOOT, you have inventory you paid for but do not get paid for in turn. You almost always want to undershoot.
by gte910h 17y ago
The issue is that if you OVERSHOOT, you have inventory you paid for but do not get paid for in turn.
You almost always want to undershoot.
- philwelch 17y agoThat's the risk mitigation part, and in the 90's Apple had a lot of problems like that (too much inventory of unwanted products) but then you start to wonder how, for instance, the Nintendo Wii went a whole year understocked.
- kd5bjo 17y agoIt costs money to retool a factory to produce something different. If the cost of lost sales due to undersupply is lower than the cost of setting up another factory, it makes sense to undersupply.
- gridspy 17y agoAlso in the case of Wii, Nintendo probably was expecting a sales downturn "any day now"