Newport Home: Multichannel Merchandising & Inventory Management
Date of this version
educational case, differential analysis, overstock inventory, multi-channel distribution, cost behavior
This case requires students to model and analyze a decision under uncertainty. The retail firm in this case has multiple distribution channels for disposal of overstock and excess seasonal inventory, and is faced with the choice of determining the best method of disposing of the inventory. Students are exposed to the typical constraints faced in brick-and-mortar retail operations, one of which is the problem of overstock as a byproduct of in-store merchandising. They are asked to contrast these operations with the opportunities and constraints inherent in selling through an internet channel. Students are asked to define the immediate differential costs and benefits of three disposal alternatives. Students must draw upon incomplete financial data to analyze the question and decide what costs and benefits can be quantified. They must also assess the risk imposed by factors whose costs cannot be estimated with the information available.
Institute of Management Accountants Educational Case Journal