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HP Deskjet Case Study

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HP Deskjet Case Study
HP Deskjet Case Study
By:
Mohd. Zubair Saifi (32237)

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

2

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

4

Mohd. Zubair Saifi, SIBM-Pune

Asia

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

6

Mohd. Zubair Saifi, SIBM-Pune

Europe
Europe

Average

Std dev

Average Inventory to support 98% sales

A

42.33

32.41

108.90

AA

420.17

203.93

838.98

AB

15830.08

5624.58

27381.56

AQ

2301.17

1168.49

4700.96

AU

4208.00

2204.58

8735.66

AY

306.83

103.12

518.62

23108.58

6243.96

35932.11

Europe TOTAL
7

Mohd. Zubair Saifi, SIBM-Pune

Asia Pacific
Asia-Pacific

Average

Std dev

Average Inventory to support 98% sales

A

114.67

281.63

693.06

AB

331.58

265.83

877.52

AG

1005.92

604.49

2247.39


References:  “Postponement project work paper” – MIT center for transportation and logistics, Version: Feb 23, 2005  http://www.business-around-theglobe.com/freecartoons/freecartoons.html, retrieved on 16th Dec, 2009 14 Mohd. Zubair Saifi, SIBM-Pune
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