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COMM 399 Logistics and Operations ManagementSupply Chain Management: Postponement1
HP Deskjet Case2
HP Deskjet Case: Background•Manufacturing in Vancouver WA–High volume, high speed –Many different models•3 DC’s: North America, Asia, Europe–simple standardized process•Transportation lead times–Europe & Asia: 5 weeks–US: 1 day3
HP Deskjet Case: Analysis•What are HP’s options?4Problem (Europe)Causes•High inventory levels•Low product availability
HP Deskjet Case: Options•Rationalize Safety Stock5•More inventory•European factory•Air shipment •Better forecasting•DC localizationShort Term OptionsLong Term Options
HP Deskjet Case Safety Stock Rationalization•Monthly Demand6BRANDMonthly DemandMeanStandard DevA42.332.4AB15830.15624.6AU4208.02204.6AA420.2203.9AQ2301.21168.5AY306.8103.1
HP Deskjet Case Safety Stock Rationalization•Example: Europe AB–Monthly mean 15830.1 and std 5624.6•What should be safety stock assuming weekly replenishment and 98% service level?