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It's the busiest time of year for North Pole Workshops. Production is in high gear, and the elves are on overtime in the sprint toward Christmas. But an unexpected spike in demand for one toy may leave children around the world disappointed on Christmas morning, whether they've been naughty or nice. At the same time, another toy's popularity threatens to plummet, leaving Santa and his elves faced with the prospect of millions of unloved playthings left in the warehouse. This is the third time in three years that Santa's elves have been caught off guard by a toy's sudden surge in popularity. Earlier in the season, even just a month ago, it would have been possible to find capacity, but now every line is running full tilt. "Oh, it used to be so simple," Santa ruminates. "Wooden blocks, a train set, a doll...Now we have more than a million SKUs....Trends jump across the oceans in an instant. I've asked the elves in the field to go beyond reporting on kids' behavior and start trend spotting. I've invested in software. But still I can't help thinking that one of these days we're not going to be able to do it." Santa and his staff are determined not to disappoint the children, but North Pole Workshops must find a way to improve its response to shifts in demand. Should Santa invest in better forecasting? Or does the answer lie in a more flexible supply chain? Commenting on this fictional case study in R0512A and R0512Z are M. Eric Johnson, the director of the Glassmeyer/McNamee Center for Digital Strategies at Dartmouth's Tuck School of Business; Horst Brandstatter, the owner of Playmobil; Warren H. Hausman, a professor of operations management at Stanford University; and Anne Omrod, the CEO of the consulting firm John Galt Solutions. THIS HBR CASE STUDY INCLUDES BOTH THE CASE AND THE COMMENTARY. FOR TEACHING PURPOSES, THE REPRINT IS ALSO AVAILABLE IN TWO OTHER VERSIONS: CASE STUDY ONLY, REPRINT R0512X, AND COMMENTARY ONLY, REPRINT R0512Z.