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Hewlett-Packard Deskjet Printer Supply Chain (a)

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Case Study:

Hewlett-Packard DeskJet Printer Supply Chain (A)

Huaide Huang: 260791906

Vikram Jadeja: 260766424

Younes Mohamad: 260807438

Sarah-Anne O’Connor-Savaria: 260666598

Adam Segreti: 260708592

 

 

Professor Beste Kucukyazici

MGCR 472-005

 

March 19th, 2019

Introduction:

Problem Analysis:

What  are  the  pros  and  cons  of  the  following  proposals  mentioned  in  the  case: a European factory, better forecasting, more inventory, air shipments.

Proposals

Pros

Cons

A European Factory

  • Shorter lead time
  • Faster response to European customers as the market was matured in early 1990        
  • More efficient delivery to the DC
  • Costly to build (does the demand justify this investment?)
  • Difficult to choose location
  • Higher fixed and variable costs (e.g. rent, wages, equipments, etc)        

Better Forecasting

  • Reduces demand variability .:. Reduces inventory
  • Prevent additional costs for storing excess inventories
  • May be a significant investment of time and money
  • Forecasting method may be unreliable thus resulting in more uncertainties in the long term

More Inventory

  • Less stock-outs
  • Inventory costs don’t appear on P&L statements, i.e. more inventory won’t affect profit, just assets/liabilities
  • Higher profit as a result of higher availability (more sales)
  • Not every location needs more inventory
  • Holding costs
  • Higher production requirements
  • Unsold inventories might become obsolete

Air shipments

  • Shorter lead time .:. Reduces inventory
  • Faster reaction time
  • Costly
  • Size and weight limitation
  • Weather and safety uncertainties

Recommendations:

Assess  quantitatively  the air freight  option  relative  to  current  operations.  Just consider  the  products  for  the  European  market.  Do  not  forget  to  consider goods-in-transit inventory   (since   HP   owns   the goods-in-transit inventory from Vancouver to Europe).  Would you support to use air freight instead of shipping via sea?

Use the excel  sheets  “Analysis”  and  “Cost  Analysis”  in  HP_data  file  and following assumptions:

•HP wants to minimize inventory while still achieving at least a 98% annual service level

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