“Bad Humor” – Poor Forecasting from Good Humor Ice Cream Leads to Shortages of Favorite Ice Cream TreatsPosted by joe
This year unseasonably warm spring temperatures gave drivers of Good Humor ice cream trucks (which often roam neighborhoods in U.S. cities and towns) the opportunity to make some money early in the selling season. But many of these same drivers are now upset as Good Humor has run out of customer favorites — like the Toasted Almond and Chocolate Éclair ice cream bars. These drivers are important channel members for Good Humor, and when they can’t stock customer favorites everyone loses. This situation provides an opportunity to discuss the tradeoff faced by many producers of goods and services. When forecasting sales, producers have to tradeoff inventory costs and possibly spoilage if they overestimate demand against lost sales and the loss of consumer and dealer goodwill when demand outstrips supply. Good Humor plants will eventually catch up with demand — can you wait until the end of July??? You can read more in this Wall Street Journal article, “Not Cool: I Scream, You Scream, We All Scream ‘Where the Heck’s Our Ice Cream‘” (May 25, 2012, non-subscribers may need to click here).