Selling ‘Scary’ Before ‘Merry’

3. Supply Santa's sleigh only when it's cost effective. Retailers have to strike a difficult balance when it comes to shipments. Late or incomplete shipments translate to out-of-stock items, which can ultimately ruin promotions. Early shipments mean higher carrying costs. To prevent the former scenario, retailers will usually add safety stock to their inventory; but safety stock isn't free either, so it's best kept at a minimum. Unfortunately, it's very difficult to calculate the optimal level of safety stock.