Vox recently published insight featuring Arzum Akkas, Assistant Professor in Operations and Technology Management, discussing the supply-demand mismatch that at-home digital exercise company Peloton has been plagued with since the start of the pandemic.
“They have to make the range bigger in terms of forecasts, and they have to consider bigger risks for supply and plan accordingly, they cannot plan their operations assuming that I’m going to get what I want when I want it.”
Arzum Akkas
Assistant Professor in Operations & Technology Management
The article speaks to the initial surge at the start of the pandemic that Peloton experienced, resulting in an optimistic forecast that has now caused the company to take a major hit in revenue. The company tried to compensate by coming out with new, lower priced equipment, and cutting the prices of their highly priced bikes but has nevertheless announced plans for “resetting production levels for sustainable growth.” Arzum shares her view on revenue projections by explaining how the number one rule in business forecasting is that forecasting is always wrong, a phenomenon which the at-home digital exercise company has experienced first-hand. She elaborates on this dilemma by stating,