# Hp Case

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Date Submitted: 11/23/2012 06:36 AM

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1. Develop an inventory model for managing the DeskJet printers in Europe assuming that the Vancouver plant continues to produce the six models sold in Europe. Using the data in Exhibit 17.13, apply your model and calculate the expected yearly investment in DeskJet printer inventory in the Europe DC.

HP uses P model, because HP sends a weekly shipment of printers to the DC in Europe to meet inventory target level.

Europe Options Options Monthly Mean Monthly SD Options Weekly Mean = Q OptionWeekly SD = s2 Lead Time in Weeks (L1 + L2) = L Review Period T in Weeks = T Service Factor = z Exposure Demand SD = sT+L Safety Stock = zsT+L Monthly Average Inventory = (Q/2)+SS

A 42.3 32.4 10.6 16.2 6.0 1.0 2.05 42.9 87.9 93.2

AA 420.2 203.9 105.0 102.0 6.0 1.0 2.05 269.8 553.0 605.5

AB 15830.0 5624.7 3957.5 2812.4 6.0 1.0 2.05 7440.8 15253.7 17232.4

AQ 4208.0 2204.6 1052.0 1102.3 6.0 1.0 2.05 2916.4 5978.6 6504.6

AU 2301.2 1168.5 575.3 584.2 6.0 1.0 2.05 1545.8 3168.8 3456.5

AY 306.8 103.1 76.7 51.6 6.0 1.0 2.05 136.4 279.7 318.0

Total 23108.5 5777.1 25321.7 28210.3

Expected Yearly Investment:

Average Cost of the Product 250.00 \$

Average Demand per month 23108.50 units

Average Inventory Investment 5777125.00 \$

Average Inventory per month 28210.30 units

Inventory Cost ( 25% of \$250) 62.50 \$

Warehousing Cost 1763143.75 \$

Total Cost 7540268.75 \$

The expected yearly investment equal to \$7,540,269

2. Compare your results from question 1 to the current policy of carrying one month's average inventory at the DC.

Current policy of carrying one month's average inventory at the DC will cost company higher comparing to P model. Company can save warehousing cost from \$2,888,563 to \$1,763,144 and also reduce average inventory per month by 18,007 units (46,217-28,210). In the other word, company could save \$1,125,418.8

3. Evaluate the idea of supplying generic printers to the Europe DC and integrating the product...