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Category: Business and Industry
Date Submitted: 10/14/2013 08:54 PM
HP Deskjet Case Study
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
3
Mohd. Zubair Saifi, SIBM-Pune
Cycle time for production and distribution
Factory Cycle Time
US DC
Europe
Asia
4
Mohd. Zubair Saifi, SIBM-Pune
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
5 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
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Mohd. Zubair Saifi, SIBM-Pune
Europe
Europe A AA Average 42.33 420.17 Std dev 32.41 203.93 Average Inventory to support 98% sales 108.90 838.98
AB
AQ AU AY Europe TOTAL
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15830.08
2301.17 4208.00 306.83 23108.58
5624.58
1168.49 2204.58 103.12 6243.96
27381.56
4700.96 8735.66 518.62 35932.11
Mohd. Zubair Saifi, SIBM-Pune
Asia Pacific
Asia-Pacific
A AB AG AK AU
Average
114.67 331.58 1005.92 31.00 448.50
Std dev
281.63 265.83 604.49 23.49 555.71 750.27
Average Inventory to support 98% sales
693.06 877.52 2247.39 79.25 1589.78 3472.53
APAC TOTALZubair Saifi, 1931.67 Mohd. SIBM-Pune
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North America
North America Average...