HP Deskjet Case Study Essay

Custom Student Mr. Teacher ENG 1001-04 30 April 2016

HP Deskjet Case Study

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

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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
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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

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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
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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

AK

31.00

23.49

79.25

AU

448.50

555.71

1589.78

APAC TOTALZubair Saifi, 1931.67
Mohd.
SIBM-Pune

750.27

3472.53

8

North America
North America Average
A

Std dev

Average Inventory to support 98% sales

26432.17

7377.06

41582.79

AB

146.33

130.38

414.11

AG

14.67

30.27

76.84

AK

16.17

23.52

64.47

AU

2.67

4.56

12.03

Mohd.
SIBM-Pune
NAM TOTAL Zubair Saifi,26612.00
9

7384.12

41777.12

Inventory Costs
Inventory Costs
total with 98%
market
availability
Inventory Costs
total with 90%
market
availability
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Mohd. Zubair Saifi, SIBM-Pune

2,886,214

1,849,329

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Mohd. Zubair Saifi, SIBM-Pune

Postponement
 Postponement means delay in product differentiation

 Supply Chain costs can be divided into two parts

Physical Costs

1.

Market Mediation Costs

2.

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Cost of Production, Transportation, Inventory storage etc.

When supply exceeds demand then product is marked down and sold When demand exceeds supply then it results in dissatisfaction and lost opportunities

Mohd. Zubair Saifi, SIBM-Pune

In HP deskjet case study
 Basic product should be made at Vancouver plant in USA

 Final Assembly and differentiation to be done at DCs
 DCs should be provided with complete processes for assembly

of products
 It will help company fight demand variations in a better way  HP can now support more number of models

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Mohd. Zubair Saifi, SIBM-Pune

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

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Mohd. Zubair Saifi, SIBM-Pune

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