But They Won’t Buy Ducks Anymore!
The Bright-Lite Shirt Company buys wholesale sweatshirts, nightshirts, T-shirts, and other clothing items and, using a novel four-color processing system, imprints hunDr.eds of designs on the items. The printed shirts are marketed widely to sports stores, department stores, college campus outlets, variety stores, vacation shops, and so on. Gordon Smith, marketing manager, likes to have a wide variety of products on hand so orders can be promptly met. As the number of designs has grown, so has the inventory. However, the designs often exhibit “fad” characteristics, and the demand for ducks, bears, flowers, or sports heroes can change fairly rapidly. Beverly Patton, the controller, has expressed dismay at the growing inventory and especially the issue of inventory obsolescence. Beverly is now preparing for a meeting with Bright-Lite’s external auditor. The auditor is sure to ask for a write-down of inventory to the lower of cost or market. Beverly has sent a report to Gordon urging him to reduce his inventory and change his production concept. Gordon is reluctant to change because Bright-Lite has developed an excellent reputation for meeting emergency requests for inventory. As Bright-Lite’s president, which position will you support: Gordon’s or Beverly’s? Explain.