Premier Biomedical Inc (BIEI)

[txhighopes]

Replenishment Order = (Time to delivery x Expected Sales) + Forecast

If your expected sales increase during time of production, you suffer a stock out. This does not mean you get liberal and pad the numbers. This should always be a mathematical equation rather than a lump sum guess.

My guess is that in this situation, the expected sales ramped up an unexpected amount before they took delivery of the replacement. Nothing wrong with that, and it gives you more data with which to make educated decisions on the next go-round.

For example, if their flag was set to 150, because they were only selling 5 per day. They would have 30 days supply. If lead time is 3 weeks, you will have a very close encounter to a stock-out. If all of a sudden demand increases to 8 per day, you hit stock-out levels. And you still have to rely on production to deliver on time.

They will figure this out. I'm confident!

I also bet that with the financing in place, they will have an annual plan for their forecasted sales and manufacture and delivery will become more accurate.