HP Annual Inventory Cost Problem - Supply Chain Management Total Annual Inventory Cost COMM 449 Tom Culham P Eng Ph D This slide deck is accompanied by

# HP Annual Inventory Cost Problem - Supply Chain Management...

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Supply Chain Management Total Annual Inventory Cost COMM 449 Tom Culham P. Eng, Ph. D. This slide deck is accompanied by an Excel spreadsheet File Name: HP Annual Average Inventory Cost Calculations
Hewlett Packard 17-2Compute HP’s annual average inventory cost of movement from the FAT to European DC given the case data. This case is accompanied by an Excel spreadsheet File Name: HP Annual Average Inventory Cost Calculations
17-3 Fixed Time Period Model Including Safety Stock Hewlett Packard uses a fixed time period model for ordering inventory. T= the review period (the frequency orders are placed) L = the lead time.
4 Case Data
Calculating Annual Average Inventory Costs Annual Average Inventory Costs = (Safetystock(SS)+Pipeline(PL)+Cycle Stock(CS))x(unit cost) (percent carrying cost). SS= Z value * standard deviation of the exposure period (T+L) Z value for service level of 98%= 2.06 PL= Inventory in transit CS = Average weekly order/2