Essay on Hp Case Study

706 Words Feb 21st, 2011 3 Pages
MBA 533

Advanced Operations Management

Fall, 2010

Case: Hewlett-Packard: DeskJet Printer Supply Chain A and B

What are the pros and cons of the following proposals mentioned in the A case: a European factory, better forecasting, more inventory. • European factory Pros: (1) Shorter delivery time, which means less pipe line inventory, less inventory cost. (2) Faster response to market requirement. Cons: (1) Need to build another factory, which means lots of fixed costs. (2) Complex management (3) May need to follow local law requirements. • Better forecasting: Pros: (1) Better forecast always reduce uncertainty, reduce inventory while
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• The total inventory by sea: o Individual printer: 48357.5 o Generic printer: 40019 • The total inventory by air: o Individual printer: 16523.1 o Generic printer: 12105 • Total inventory save by switching to ship by air: o Individual printer: 65.83% o Generic printer: 69.75% • The shipping cost by air will increase the cost by $15, which is 5% of the production cost. However, considering the 24% inventory cost and inventory turns, the inventory cost saved by shipping by air is only 2.6% to 3.7%, which cannot compensate the increase shipping cost of 5%. So shipping by Air generally does not make sense.

Evaluate quantitatively the proposal in the B case for the European market. In the case of by sea, the total inventory for generic printer is 40019, comparing to the case of individual printers of inventory of 48357.5, the proposal will save about 17% of inventory. In the case of by air, the total inventory for generic printer is 12105, comparing to the case of individual printers of inventory of 16523, the proposal will save about 27% of inventory.

Will the B case proposal be effective in the other major markets, North America and Asia? The demand in the North America market is very dominated by the printer type A, and the demands of the other types of printers are minimal. The standard deviation altogether is 7378, if the demands are

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