How to determine the quantity of DVDs to produce?
This article is intended for students.
This article is only for the Marketing Videogame simulation.
In the business world, as in the simulation, we do not know how many units we will sell in the next year, but we try to anticipate sales for each game depending on the positioning and the product life cycle. To reduce the cost of producing DVDs, we have to estimate the quantity needed to satisfy the demand for each game.
There are 3 main elements to be considered:
- Sales forecast
- How many units are we planning to sell?
- Distribution
- Where do we sell our products? In stores and/or Downloads
- Inventory
- What is the state of stock?
- Is there a new version of the game?
The main goal is to optimize the order quantity to fulfil the market demand while minimizing the total costs related to the original production and additional orders.