When adding a new item to an MTS product line, what forecast considerations should the company prioritize?

When introducing a new item to a Make-to-Stock (MTS) product line, it is essential to evaluate the sales promotion effect on existing products. This consideration is crucial because the launch of a new item can impact the sales dynamics of existing products within the same category. Understanding how a promotional strategy for the new item might draw attention away from existing products helps manage inventory and forecast accuracy more effectively.

Additionally, evaluating sales promotion effects ensures that the company doesn’t inadvertently boost stock levels of current items while they might experience a decline in demand due to cannibalization from the new product. This holistic approach allows for better forecasting and inventory management, as it takes into account the potential shifts in customer purchasing behavior that could arise from the introduction of the new item.

In summary, focusing on the promotional effects aids in understanding the overall market response to new product introductions, ensuring that forecasts remain aligned with actual consumer demand across the product line.