Introduction
In 1990’s, Hewlett-Packard faced several problems with
inventory levels for the DeskJet Printer product line. This
printer was produced in Vancouver’s facility and from there was shipped to a distribution center.
HP has three distribution centers (DC)
North America
Asia Pacific and
Europe
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Mohd. Zubair Saifi, SIBM-Pune
Deskjet Supply Chain
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Mohd. Zubair Saifi, SIBM-Pune
Cycle time for production and
distribution
Factory Cycle Time
US DC
Europe
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Mohd. Zubair Saifi, SIBM-Pune
Asia
Problem
Satisfy customer requirements by holding minimum
inventory
Bring a consensus amongst various division about inventory levels
Marketing wants 98% product availability
Distribution wants minimum inventory
Sources of uncertainties
Delivery of incoming material
Internal Processes
Demand
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Mohd. Zubair Saifi, SIBM-Pune
Bad Solution – Forecasting
Forecasting is generally not reliable
Longer forecasting horizon makes forecast worse
Aggregate forecasts are much accurate
In case of HP deskjet case the problem is more serious
because
Higher Inventory carrying costs in case of HP case varying from
12% to 60%
In technology products, chances of obsolescence are higher
The Essay on Excel Logistics Case
Purpose To introduce participants to the supply chain concept and to the effects decisions along the chain have on inventory levels and costs. Introduction In this game the retailer sells cases of beer to a consumer and orders cases of beer from the wholesaler; the wholesaler sells cases of beer to the retailer and orders cases of beer from the distributor; and the distributor sells cases of beer ...
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Mohd. Zubair Saifi, SIBM-Pune
Europe
Europe
Average
Std dev
Average Inventory to support 98% sales
A
42.33
32.41
108.90
AA
420.17
203.93
838.98
AB
15830.08
5624.58
27381.56
AQ
2301.17
1168.49
4700.96
AU
4208.00
2204.58
8735.66
AY
306.83
103.12
518.62
23108.58
6243.96
35932.11
Europe TOTAL
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Mohd. Zubair Saifi, SIBM-Pune
Asia Pacific
Asia-Pacific
Average
Std dev
Average Inventory to support 98% sales
A
114.67
281.63
693.06
AB
331.58
265.83
877.52
AG
1005.92
604.49
2247.39
AK
31.00
23.49
79.25
AU
448.50
555.71
1589.78
APAC TOTALZubair Saifi, 1931.67
Mohd.
SIBM-Pune
750.27
3472.53
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North America
North America Average
A
Std dev
Average Inventory to support 98% sales
26432.17
7377.06
41582.79
AB
146.33
130.38
414.11
AG
14.67
30.27
76.84
AK
16.17
23.52
64.47
AU
2.67
4.56
12.03
Mohd.
SIBM-Pune
NAM TOTAL Zubair Saifi,26612.00
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7384.12
41777.12
Inventory Costs
Inventory Costs
total with 98%
market
availability
Inventory Costs
total with 90%
market
availability
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Mohd. Zubair Saifi, SIBM-Pune
2,886,214
1,849,329
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Mohd. Zubair Saifi, SIBM-Pune
Postponement
Postponement means delay in product differentiation
Supply Chain costs can be divided into two parts
Physical Costs
1.
Market Mediation Costs
2.
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Cost of Production, Transportation, Inventory storage etc.
When supply exceeds demand then product is marked down and sold When demand exceeds supply then it results in dissatisfaction and lost opportunities
Mohd. Zubair Saifi, SIBM-Pune
The Term Paper on Sales and Inventory system
This chapter states the introduction of the said company’s history, its existing manual system and also the problems they encounter with it. It also states the objectives of the developers regarding the project. Additionally, the scope and limitation is also presented here which gives the readers more ideas about the study. Introduction The advent of new technology gave rise to easy and hassle ...
In HP deskjet case study
Basic product should be made at Vancouver plant in USA
Final Assembly and differentiation to be done at DCs
DCs should be provided with complete processes for assembly
of products
It will help company fight demand variations in a better way HP can now support more number of models
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Mohd. Zubair Saifi, SIBM-Pune
References
“Postponement project work paper” – MIT center for
transportation and logistics, Version: Feb 23, 2005
http://www.business-around-theglobe.com/freecartoons/freecartoons.html, retrieved on 16th Dec, 2009
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Mohd. Zubair Saifi, SIBM-Pune
