HP DeskJet Printers Supply Chain

A case on Basestock Levels and Postponement

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utdallas.edu/~metin

edu/~metin 2 .HP DeskJet Printers Then and Now The first DeskJet printer Mobile printer Color printer Photo printer utdallas.

History of HP – HP founded in 1939 by William Hewlett and David Packard – 1990 revenues $13. a manufacturer of electronic test and measurement equipment – Now. Plotters. Magnetic disc and tape drivers. Terminals and Network products utdallas. mostly manufactures computers and peripherals – Peripherals is the second largest group among six product groups – Peripherals: Printers.edu/~metin HP Radio Oscillator circa 1939 3 .2 B and profit $739 M – Then.

HP is the market leader » ??% laser utdallas. increasing.edu/~metin 4 . dropping » ??% inkjet.Printer Market – HP sold ?? M printers and made a revenue of $?? B in 1990 » Each printer about $??? » But prices has been dropping – Printers are becoming a commodity sold at supermarket – Market is composed of » ??% impact/dot matrix.

CO. OR is consolidated to the Vancouver site – Vancouver plant uses a pull system » JIT. CA and Corvallis. Sunnyvale.Vancouver Plant – Printer production at Fort Collins.edu/~metin 5 . Kanban. Stockless production – Vancouver had the proper production system – DeskJet printer became its flagship product utdallas. ID. Boise.

Printer Supply Chain ?? Lead time Supplier IC Mfg Asia DC Supplier PCAT FAT Europe DC Supplier Print Mechanism Supplier Far East DC utdallas.edu/~metin 6 .

edu/~metin 7 .What is Brent Cartier’s problem? utdallas.

 utdallas.Brent Cartier’s problem Too much inventory in the DeskJet supply chain  Some suggest pumping up more inventory  European and Asian DCs cannot meet because of ????? mismatch.edu/~metin 8 .

edu/~metin 9 .DCs operate as a push or a pull system? Asia DC FAT Europe DC Far East DC utdallas.

edu/~metin 10 .What is localization? utdallas.

edu/~metin 11 .What is localization?  Customization of a printer to meet the language and power supply requirements of the local countries – Product manuals – Several power cords  Where is localization done? utdallas.

Can a DC localize? utdallas.edu/~metin 12 .

we have to put processes in place to support them  In conclusion. DC managers are for/against (??) localizing at DCs. If we want to take on manufacturing processes here. utdallas.edu/~metin 13 .Can a DC localize? DCs do not have a ???? ???? system for assembly operations  US DC manager To Beal says:  – [At a DC] We have to decide what our core competency is ….

What is inventory imbalance? utdallas.edu/~metin 14 .

Inventory imbalance  Start with an example: – There are 1000 DeskJet configured/packaged for France – Another 1000 for England – What is the shortage if the demand in France and England are both 1000 printers? – What is the shortage if the demand in France is 1500 while the demand in England is 500?  Inventory imbalance is having the correct amount of total inventory but the incorrect mixture 15 utdallas.edu/~metin .

Can localization at a DC avoid inventory imbalance? utdallas.edu/~metin 16 .

edu/~metin .Can localization at a DC avoid inventory imbalance?  Continuing with the same example: – There are 2000 DeskJet ready for Europe – What is the shortage if the demand in France and England are both 1000 printers? » Shortage is ?? – What is the shortage if the demand in France is 1500 while the demand in England is 500? » Shortage is ??  Not convinced yet. what is the effect of postponed localization on printer inventories? 17 utdallas.

To convince ourselves more Consider options with monthly demand larger than 1000 in Exhibit 4. Nov AB AQ AU 20572 4008 4564 Dec 20895 2196 3207 Jan 19252 4761 7485 Feb 11052 1953 4908 Mar 19864 1008 5295 Apr 20316 2358 90 May 13336 1676 0 Jun 10578 540 5004 Jul 6096 2310 4385 Aug 14496 2046 5103 Sep 23712 1797 4302 Oct 9792 2961 6153 Compute the basestock levels for each product to achieve a fill rate of 98%. Note that basestock levels can be reduced if these options are aggregated into a single one. What would be the basestock level for this single product? utdallas.edu/~metin 18 .

Postponing localization to the DCs Is the US DC manager right?  What problems are possible with localization at DCs?  How to avoid these problems?  utdallas.edu/~metin 19 .

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