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The use of Asian suppliers kept costs low but subjected
Harlee to concerns such as: (1) A 3-to-4 month order, or lead
time; (2) additional delays during the Asian rainy season; (3)
the possibility of political unrest that stopped and/or
substantially decreased production; and (4) approximately 20
percent defective inventory. For these reasons, Harlee
maintained at least 3 to 4 months of inventory at all times.
However, during two of Harlee’s biggest seasons, Christmas and
spring, which coincide with the Asian rainy season, inventory was
increased beyond the 3 to 4 months standard. Harlee was
increasing its inventory at the time of decedent’s death.
At the time of decedent’s death, Harlee conducted business
from leased premises in Corona, California. Because the building
had become too small for Harlee’s needs and the lease was about
to expire, Harlee leased new premises beginning on January 1,
1996.
Harlee was exposed to competition by similarly sized
companies on a national level. Its customer base consisted of
approximately 100 customers, including retail stores,
distributors and manufacturers. Although most of the customers
were retail stores, the distributors generated the largest amount
of revenue. Once a distributor became sufficiently large enough
to import products directly, it would cut out the middleman, such
as Harlee. Sometimes Harlee remained involved as an agent for
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Last modified: May 25, 2011