Compare their system average inventory of one month demand to your system

Compare their system average inventory of one month

This preview shows page 28 - 34 out of 39 pages.

Question 2Compare their system (average inventory of one month demand) to your system (ordering according the fixed time period model with safety stock): what is the difference in annual inventory costs and levels for each product and what is the difference is service level each product. Which is the better system?
Image of page 28
Hewlett Packard Assignment Question 3Evaluate the idea of supply generic printers to the Europe DC and integrating the product by packaging the power supply and the instruction manual at the DC just prior to delivery to the European resellers. Focus on the impact on DC inventory investment in this analysis.
Image of page 29
Hewlett Packard Assignment Question 3 A AB AU AA AQ AY A AB AU AA AQ AY T L Base Case Your Model Option 1 Generic Product T L Question 3 Compare Base Case to Shipping Generic Products Generic Product A AB AU AA AQ AY A AB AU AA AQ AY T L Option 2 Fly the product at $10 per unit extra. Week 1 2 3 4 5 6 Week 1 2 Question 4 Compare Base Case to Shipping All Products By Air Pipeline Inventory
Image of page 30
Safety Stock Calculation SS is the safety stock over the exposure period (T+L): 6 weeks. This requires 3 steps: (1) a calculation to determine the std dev for a one week period (formula 17.7). In this case it is the std dev for the monthly demand/ Square root of 4.33 (there are 4.33 weeks in a month) (2) a calculation to determine the std dev for a 6 week period. Again see formula 17.7 in the text. In this case it is the std dev of the weekly demand (calculated in (1) above * the square root of 6 ( there are 6 weeks in the exposure period) (3) multiply the std dev of the exposure period and the z level for 98% availability (2.06) Monthly Weekly Demand during EP Safety St. Pipeline Cycle St. Brand Mean Std dev Mean Std dev Mean Std dev Units Units Units (units) (units) (units) (units) (units) (units) (units) (units) (units) A 42.30 32.40 9.77 15.57 58.61 38.14 78.57 48.85 4.88
Image of page 31
Pipeline Units (Stock in Transit) Pipeline inventory is the inventory which is traveling to Europe. If it takes 5 weeks to get to Europe and if I am shipping 9.77 units every week throughout the year then there is an average of 48.85 units of inventory on the ocean all the time . Monthly Weekly Demand during EP Safety St. Pipeline Cycle St. Brand Mean Std dev Mean Std dev Mean Std dev Units Units Units (units) (units) (units) (units) (units) (units) (units) (units) (units) A 42.30 32.40 9.77 15.57 58.61 38.14 78.57 48.85 4.88
Image of page 32
Average Annual Cycle Stock Cycle stock is a term (vaguely referenced in the text) for order quantity and annual inventory determined by the formula: Q=d(T) Because you are trying to determine the annual average inventory (not the quantity to order in a given week) Q = d(T) In the HP case, T= one week, so d (demand) must be on the same time terms as T (weeks). Take the annual demand and divide by 52 to get d or the monthly demand and divide by 4.33.
Image of page 33
Image of page 34

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture