Customer orders

Q:  I am not clear what customer orders listed in Report D represents.  I am not clear regarding what time period these orders are for and why some companies sell significantly more than their customer orders.

A:  Customer orders indicate the number of customers who attempt to buy the product of their choice from a firm during the current quarter.  If firm A stocks out in an area, the customers who wanted to buy firm A's product will buy other firm's products as substitutes.  The products purchased as substitutes will not show up as customer orders, but they will show up as sales on the other firm's reports.

It should be noted that during the first quarter of production of a new model, the new model will not have been introduced into the market.  The company is building inventory of the new model so that it will be available for sale when it is introduced to the market in the following quarter.  Thus customer orders during that quarter are all for the previous model even if all previous-model inventory has been sold. Customers will not be aware of the new model or of any perceived benefits of the new model until it is formally introduced to the market during the following quarter.  If all previous-model inventory has been sold, customer orders will be filled with available production of the new model.  The new model will not show up in Report F until it has been introduced into the market the quarter after production begins.