DeskJet Demand Data from Europe

Europe
NOV DEC JAN FEB MAR APR MAY JUN
Options
A 80 - 60 90 21 48 - 9
AB 20,572 20,895 19,252 11,052 19,864 20,316 13,336 10,578
AU 4,564 3,207 7,485 4,908 5,295 90 - 5,004
AA 400 255 408 645 210 87 432 816
AQ 4,008 2,196 4,761 1,953 1,008 2,358 1,676 540
AY 248 450 378 306 219 204 248 484
TOTAL 29,872 27,003 32,344 18,954 26,617 23,103 15,692 17,431

By calculating the co-ef of variance, the degree of variance of the demand with respect to mean
is determined. The models with less co-ef of v ariance are comparitively having stable demand
than the others.

Europe
NOV DEC JAN FEB MAR APR MAY JUN
Options
A 80 - 60 90 21 48 - 9
AB 20,572 20,895 19,252 11,052 19,864 20,316 13,336 10,578
AU 4,564 3,207 7,485 4,908 5,295 90 - 5,004
AA 400 255 408 645 210 87 432 816
AQ 4,008 2,196 4,761 1,953 1,008 2,358 1,676 540
AY 248 450 378 306 219 204 248 484
TOTAL 29,872 27,003 32,344 18,954 26,617 23,103 15,692 17,431

From the above caculated probablities, it is clear that with the existing system the chances for
stock out are high for all the models. The need for more saftey stock is there.

1) Considering the probability as 98% for all the models, we will now find out the safety stock
requirements.

Europe NOV DEC JAN FEB MAR APR MAY JUN

Options
A 80 - 60 90 21 48 - 9
AB 20,572 20,895 19,252 11,052 19,864 20,316 13,336 10,578
AU 4,564 3,207 7,485 4,908 5,295 90 - 5,004
AA 400 255 408 645 210 87 432 816
AQ 4,008 2,196 4,761 1,953 1,008 2,358 1,676 540
AY 248 450 378 306 219 204 248 484

2) Considering the probability as 98% for models with high co-ef of variance( AU,AQ,AA) and
80% for models with low co-ef of variance (A,AY,AB).

Europe
NOV DEC JAN FEB MAR APR MAY JUN
Options
A 80 - 60 90 21 48 - 9
AB 20,572 20,895 19,252 11,052 19,864 20,316 13,336 10,578
AU 4,564 3,207 7,485 4,908 5,295 90 - 5,004
AA 400 255 408 645 210 87 432 816
AQ 4,008 2,196 4,761 1,953 1,008 2,358 1,676 540
AY 248 450 378 306 219 204 248 484

3) If localization is done at the European DC, then generic printers can be kept as inventory and
can be distributued. Considering the variation in overall demand, co-ef of variance for the total
demand is 0.27 from the first table. So, lets assume 85% as the probability of stock out.

Europe
NOV DEC JAN FEB MAR APR MAY JUN
Options
A 80 - 60 90 21 48 - 9
AB 20,572 20,895 19,252 11,052 19,864 20,316 13,336 10,578
AU 4,564 3,207 7,485 4,908 5,295 90 - 5,004
AA 400 255 408 645 210 87 432 816
AQ 4,008 2,196 4,761 1,953 1,008 2,358 1,676 540
AY 248 450 378 306 219 204 248 484
TOTAL 29,872 27,003 32,344 18,954 26,617 23,103 15,692 17,431
 JUL AUG SEP OCT Mean Std. Dev

20 54 84 42 42 32.4
6,096 14,496 23,712 9,792 15830 5624.6
4,385 5,103 4,302 6,153 4208 2204.6
430 630 456 273 420 203.9
2,310 2,046 1,797 2,961 2301 1168.5
164 363 384 234 307 103.1
13,405 22,692 30,735 19,455 23109 6244.0

with respect to mean In the existing model, the target inventory level is equal to the mean. So, we can calculate the Z values of respec
aving stable demand
When we compare the obtained R with the SS included, then the Z value can be found out.

JUL AUG SEP OCT Mean Std. Dev

20 54 84 42 42 32.4
6,096 14,496 23,712 9,792 15830 5624.6
4,385 5,103 4,302 6,153 4208 2204.6
430 630 456 273 420 203.9
2,310 2,046 1,797 2,961 2301 1168.5
164 363 384 234 307 103.1
13,405 22,692 30,735 19,455 23109 6244.0

ances for Now as we now that there are high chances of stock out, we will find out the saftey stocks with different prbabiiltie
using the FIXED-QUANTITY MODEL.

fety stock

JUL AUG SEP OCT Mean Std. Dev

20 54 84 42 42 32.4
6,096 14,496 23,712 9,792 15830 5624.6
4,385 5,103 4,302 6,153 4208 2204.6
430 630 456 273 420 203.9
 2,310 2,046 1,797 2,961 2301 1168.5
164 363 384 234 307 103.1

Q,AA) and

JUL AUG SEP OCT Mean Std. Dev

20 54 84 42 42 32.4
6,096 14,496 23,712 9,792 15830 5624.6
4,385 5,103 4,302 6,153 4208 2204.6
430 630 456 273 420 203.9
2,310 2,046 1,797 2,961 2301 1168.5
164 363 384 234 307 103.1

ventory and
or the total
out.

JUL AUG SEP OCT Mean

23109
20 54 84 42 Std. Dev 6244.0
6,096 14,496 23,712 9,792 co-ef of variance 0.270196
4,385 5,103 4,302 6,153 std.dev for lead time 7350.076
430 630 456 273 R 42160.58
2,310 2,046 1,797 2,961 SS 7497.077
164 363 384 234 Average Inventory 24828.83
13,405 22,692 30,735 19,455 Holding cost 1551802
 co-ef of variance std.dev for lead time

0.77173937764652
0.355311345655328
0.523902832391531
0.48554006863405
0.507819793504862
0.335905224817928
0.270196034332151
38.155014936599
6620.97072001128
2595.12424171544
240.052394728715
1375.49152934583
121.391090145627
7350.07550010426

he mean. So, we can calculate the Z values of respective models. R=d*L .

n the Z value can be found out.

Z=(R-d*L)/std.dev for L probability G(Z)

-0.647887116405527 26%
-1.40721653308822 8%
-0.954375447289684 17.10%
-1.02978112889144 15.50%
-0.98460124318729 16.20%
-1.48851510205302 6%
-1.85050828460847 3%

l find out the saftey stocks with different prbabiilties

std.dev for lead time R SS Average Inventory

38.155014936599 141.217780620028 78.21778 109.717780620028

6620.97072001128 37317.9899760231 13572.99 25445.4899760231
2595.12424171544 11632.0046955166 5320.005 8476.00469551664
240.052394728715 1122.10740919386 492.1074 807.107409193865
 1375.49152934583 6271.25763515894 2819.758 4545.50763515894
121.391090145627 709.351734798535 248.8517 479.101734798535
Total cost

std.dev for lead time R SS Average Inventory

38.155014936599 95.4317626961092 32.43176 63.9317626961092

6620.97072001128 29372.8251120096 5627.825 17500.3251120096
2595.12424171544 11632.0046955166 5320.005 8476.00469551664
240.052394728715 1122.10740919386 492.1074 807.107409193865
1375.49152934583 6271.25763515894 2819.758 4545.50763515894
121.391090145627 563.682426623783 103.1824 333.432426623783
Total cost
 Holding Cost

6857.36128875175
1590343.12350144
529750.29346979
50444.2130746165
284094.227197434
29943.8584249084
2491433.07695695

Holding Cost

3995.73516850682
1093770.3195006
529750.29346979
50444.2130746165
284094.227197434
20839.5266639864
1982894.31507493