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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Mike Van Winkle who wrote (148482)	12/4/1999 5:05:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 176387

No, Mike, you're mixing up two different and distinct things. Different risks exist for each inventory strategy. Every manufacturing company has a certain amount of inventory risk. On the one hand inventories may be too high, in which case inventory carrying costs are high, and in the case of hi-tech inventory, there is the added risk of obsolescence. On the other hand, if inventories are too low, there is the danger of losing sales to a competitor, increased component costs caused be frequent small orders, and price increases of components. So we have a balancing act. Note also, that the analysis I presented in a previous post was on the basis of cash flows (not profits). This kind of analysis must take into account all quantifiable risks including the inventory risks I pointed out above. Optimizing inventory levels and supply chain management are not trivial issues. Dell has made its mark, in part, by paying very close attention to these issues. But, as demonstrated by the DRAM fiasco, even the best forecasting in the world is imperfect. Competitors who maintained sub-optimal inventory levels performed better than Dell for that period. Or, as a sign in a local pastry shop advises, "As you go through life, keep your eye on the donut, not the hole". TTFN, CTC