Hewlett-Packard Case Study
Essay by Congai27 • April 2, 2016 • Case Study • 1,110 Words (5 Pages) • 1,790 Views
03/31/2016
Group Name: TER
Course Name: BA452 (M) Operations Management
Group Members:
Huifen Chen 150105005
Roisin Gonsalves 150105009
Tu Thi Thanh Tran 150105012
Case Study: Hewlett-Packard Company
Deskjet Printer Supply Chain (A)
Introduction
Hewlett-Packard was established in 1939 and it constantly grew for over half century, with net income of $739 million in 1990. In particular, HP’s the most popular item, Deskjet printer was traded of $400 million. The current dominant market had shifted from electronic test and measurement equipment to computers and peripherals products. Specifically, the retail printer market had approximately 17 million units high sale in the same year. It was mainly sold as commodity products through superstores and consumer mass merchandisers. In addition, the retail market consisted of three portions: impact/dot matrix (40%), inkjet (20%) and laser (40%), while HP dominated the inkjet market in USA. The good quality products from company had widely spread around the world, especially in Europe, Asian Pacific and America. However, HP Company was facing some problems.
Problems
- The company wasn’t able to maintain satisfactory product availability.
- Didn’t reach agreement among the different parties when came to the right level of inventory.
- European DC had run out of space to store Vancouver’s products.
- The company didn’t have reliable forecast for sales
- The supply chain was affected by uncertainties.
- Delivery of incoming materials
- Internal process
- Demand
HP Case Questions:
(1) What are the pros and cons of the following proposals mentioned in the case: European factory, better forecasting, more inventory
Pros | Cons | |
European Factory |
|
|
Better Forecasting |
|
|
More Inventory |
|
|
(2) Access quantitatively the airfreight option relative to current operation. Just consider the products for European market. Do not forget to consider pipeline inventory (since HP owns the pipeline inventory form Vancouver to Europe). Use the following assumptions:
Assumptions
| Inventory holding cost 12% |
Achieving at least a Fill rate 98% | |
Z statistic from table 2.05 | |
Leading time (airfreight) 1 week | |
Airfreight Shipment cost 25 $ | |
Leading time (via sea) 5 weeks | |
Sea shipments 10 $ | |
On a weekly basis (4.33weeks /month) | Printer Production Cost 300 $ |
Dollar per printer | Printer sales price 450 $ |
Exhibit 4 Monthly Demand Data by Region and Option Type
Europe | Monthly mean | Monthly Std Dev | Fill rate 98%, Z=2.05 | Using the formula: Order Quantity : [pic 1] From the standard normal distribution table, z=98% lie between 2.05-2.06, we take z=2.05 as it is more close to 98%. |
A | 42.3 | 32.4 | 42.3+2.05x32.4 =108.72 | |
AA | 420.2 | 203.9 | 420.2+2.05 x203.9 =838.195 | |
AB | 15830.1 | 5624.6 | 15830.1+2.05x5624.6=27360.53 | |
AQ | 2301.2 | 1168.5 | 2301.2+2.05x1168.5=4696.625 | |
AU | 4208.0 | 2204.6 | 4208+2.05x2204.6=8727.43 | |
AY | 306.8 | 103.1 | 306.8+2.05 x103.1=518.155 | |
Total | 23108.6 | 6244.0 | 23108.6+2.05x6244=35908.8 |
...
...