Tomorrow marks one of the busiest internet shopping days of the year. Companies are having to boost their inventories, but how much? Their first priority is to make a sale. This is very difficult throught the internet, because customers can cross-check prices between companies a lot easier. The price of the product needs to be reasonable to competitors. National retail chains are hoping to earn close to $700 million on Monday, and inventory is very important. With the easy use of e-commerce shopping, if a product is not in stock, the customer can go to another company. Retail companies need to look at lead times of products. If they are low on products and can get them quick and easily, there is no need to stock these, but order as needed. If they are difficult to obtain in a quick manner, how much do they need to have in inventory? What is the best way to avoid backorders and stockouts on this busy Monday?
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Companies that do their business on the internet don't always need to possess their inventory, so the inventory concerns might not be as drastic as people anticipate. For example, Amazon.com specializes in virtual fulfillment, and they never hold much of the inventory that they sell.
-Andrew Freeman
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