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Another alternative that can be considered is inventory pooling by building up finished good inventory in the factory. Hewlett-Packard Company Deskjet Printer Supply Chain (A) Table of Contents Introduction: 3 Problem identification: 3 Recommendations and solution 5 Strategies to be adapted: 5 A. Quick response can be used, along with improved and more accurate forecasting: 6 II.
In the long term as the demand in Europe builds up the setting up a facility in Europe can be considered.
As an initial step in this process assembling in Europe can be considered.
Conclusion If 12% is considered to be the carrying cost of inventory then it is more cost effective to just use the new data to forecast the demand and thus maintain 98% line item fill rate.
But if it is 60% transportation by means of air should be used.
monthly mean * shipping cost/unit * 12 = 18139106.1$ Taking 60% carrying costs Option Monthly Mean Monthly Std. Lead Time Reorder Interval SD (L R) Safety Stock Average Inventory Inv Cost EUROPE A 42.3 32.4 42 7 41.4 84.9 89.8 258684.6 AA 420.2 203.9 42 7 260.6 534.2 583.2 1679699.6 AB 15830.1 5624.6 42 7 7188.3 14736.1 16583.0 47758916.4 AQ 2301.2 1168.5 ..more.
Conclusion This will be a long term investment and depends on the scale of demand in Europe.
This case describes a challenge facing Hewlett-Packard's (HP) Vancouver Division in 1990.
Although its new inkjet printers were selling well, inventory levels worldwide were rising as sales rose.
HP was the market leader in US while Cannon was in Japan and Europe had competitors like Epson, Manisman-tally, Siemens and Olivetti.
The Vancouver Division of HP (the personal printer activities were consolidated) introduced the Kanban process and converted to stockless production which also reduced cycle time and reduced inventory time from 3.5 months to 0.9 months. Middle The total sales are 600,000 units which are close to the total of the forecasted demands.