Assignment Task:
Task:
Musictoday, LLC: Managing Inventory for Night Train
On a frosty morning in January 2019, Jack Murphy sat at his desk and thought about how he could get his client, Night Train, back on track.’ Murphy Was NT of operations for Musics day, a provider of c-commerce, ticketing, and merchandising senices to the music industry. For a wide variety of artists, Musictoday sold tickets to live events, built custom online stores, and fulfilled orders (or merchandise (often referred to as “merch” by fans), including CDs, vinyl, T-shirts, hats, posters, and stickers (Exhibit 1). Musictoday also packed and shipped those orders from inventory that the company stocked in its warehouse in Charlottesville, Virginia. Sales of CDs and downloaded music over the past five years had taken a nosedive for most artists as consumers tended toward using subscription services such as Slimily and Pandora to listen to music. For revenue, artists relied increasingly on touting and mach, which was offered both at concert venues and online, via personalized websites. Music sales represented, for many artists, less than 5% of revenue.: By 2019, 30′ a of an artist’s revenue, on average, was derived from merch. Because of these changes, the merch industry had grown at 10% a year or more over the past three years—jumping from $2.82 billion in 2015 to S3.1 billion in 2016, and expanding from thefts As often happened, growth in sales attracted competition. Merch companies created unique VIP kits, held promotional and pop-up store events, bundled merch with concert tickets, adopted a wider variety of clothing styles to appeal to a discerning market, and designed unique merch kits with specific relevancy to an artist’s particular fan base, such as masks, poly resin toy guns, photographs, and more. It was imperative that Musictoday keep up with the market to remain profitable and take advantage of the growth potential—but due to the expanding complexity required to deliver such a wide variety of products, Murphy knew that doing so would require a more sophisticated approach to inventory management. Although Night Train was a relatively small client for Musictoday, the company liked to provide a high level of service for all of its clients. Over the previous few months, during the peak of the holiday season that was so critical to sales, Musictoday had stocked out of Night Train posters and thus had lost important revenue opportunities. Although stock-outs were disappointing to clients, lost sales were even more disappointing for Musictoday. The company charged a fixed percentage of sales as its fee, so extra costs for expedited orders hit the bottom line.
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