HIST 449 Lecture Notes - Lecture 11: Hp Deskjet, Standard Deviation, Shortage
9 Jun 2018
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HP Deskjet Printers Supply Chain
If you use a factory located in Asia to produce the Deskjet printers for the Asian market, the
benefits for HP will be huge because of shorter leadtimes. In that case, the factory will not be a
specialized factory, but for general purposes.
If you have specialized factories, you become efficient and enjoy the benefits of the economies of
scales. HP produces everything in their Vancouver factory but still has suppliers all over the world.
The 3 main distribution centers: North America, Europe, Asia
They have customers in each country to satisfy the demand (purchase at the retail stores).
We are analyzing inventory management problems.
In terms of sales, European distribution centers account for the biggest portion.
Proposals
• Forecasting improvement
• European Factory
• Less ASL
• Change in transportation mode
• More Inventory
• Postponement
Inventory = Q/2 + SS
Once you play with the order quantity, you can always increase or decrease the inventory levels.
The order quantity is with what we satisfy the demand.
The safety stock is a buffer stock to be able to guarantee a certain ASL.
SS = z x (Std of LTD)
If you want to reduce SS, you reduce Z, Std of LTD or both.
• If you use a lower service level, you can reduce z. However, they don't support this idea
because the market share highly depends on the availability of the product (measured with
the annual service level).
• Standard deviation of LTD formula
Pros, Cons and Benefits of the Proposals
1. Improving forecasting
• Pros: Decrease the standard deviation of the demand
• Cons: Market studies costs
• Risks: No guarantee that the forecast will be better + the forecast are based on old datas
(60% failure attempts)
2. More Inventory
Would not accept, because there are already issues of overstock. Even though it is more
profitable for HP to have excess inventory than understock issues, it makes no sense to add
to this excess inventory without reason.
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
If you use a factory located in asia to produce the deskjet printers for the asian market, the benefits for hp will be huge because of shorter leadtimes. In that case, the factory will not be a specialized factory, but for general purposes. If you have specialized factories, you become efficient and enjoy the benefits of the economies of scales. Hp produces everything in their vancouver factory but still has suppliers all over the world. The 3 main distribution centers: north america, europe, asia. They have customers in each country to satisfy the demand (purchase at the retail stores). In terms of sales, european distribution centers account for the biggest portion. Forecasting improvement: european factory, change in transportation mode, more inventory, postponement. Once you play with the order quantity, you can always increase or decrease the inventory levels. The order quantity is with what we satisfy the demand.
