HP deskjet Essay

Case Hewlett-Packard-Supplying the Deskjet Printer in Europe The DeskJet printer was introduced in 1988 and has become one of Hewlett-Packards (HPs) or so successful products. Sales have grown steadily, reaching a take of over 600,000 units in 1990. Unfortunately, inventory egression has tracked sales growth closely. HPs distribution centers are filled with p everyets of the DeskJet printer. Worse yet, the government in Europe claims that inventory levels there need to be raise even further to maintain satisfactory product availability. THE DESKJET SUPPLY bowed stringed instrumentThe network of suppliers, manufacturing sites, distribution centers (DCs), dealers, and customers for the DeskJet product make up the DeskJet deliver chain of mountains (see designate 17.14). HP in Vancouver does manufacturing.There are two learn stages in the manufacturing process (1) printed term of enlistment fable and test (PCAT) and (2) utmost assembly and test (FAT). PCAT involves the assem bly and testing of electronic components (like integrated circuits, read-only memories, and raw printed circuit boards) to make logic boards used in the printer. FAT involves the assembly of different(a) subassemblies (like motors, cables, keypads, plastic chassis, gears, and the printed circuit assemblies from PCAT) to produce a running(a) printer, as substantially as the final testing of the printer. The components needed for PCAT and FAT are sourced from other HP divisions as well as from external suppliers worldwide.Exhibit 17.14 HP DeskJet Supply ChainSelling the DeskJet in Europe requires customizing the printer to foregather the language and power supply requirements of the local countries, a process cognize as localization. Specifically, the localization of the DeskJet of different countries involves assembling the appropriate power supply module, which reflects the correct voltage requirements (110 or 220) and power cord plug, and packaging it with the working printer and a manual written in the appropriate language.Currently, the final test is done with the actual power supply module include with the printer. Hence, the finished products of the factory are localized versions of the printer destined for all the different countries. For the European Market six different versions are presently produced. These are designated A, AA, AB, AQ, AU, and AY asindicated in the Bills of Materials shown inExhibit 17.15.Exhibit 17.15 HP DeskJet Bill of MaterialsThe total factory through hurtle conviction through the PCAT and FAT stages is almost one week. The transportation time from Vancouver to the European DC is five weeks. The ample shipment time to Europe is due to ocean transit and the time to clear customs and duties at port of entry. The plant sends a hebdomadally shipment of printers to the DC in Europe.The printer industry is tallly competitive. Resellers necessity to carry as little inventory as possible. Consequently, there has been change magnitude pressure for HP as a manufacturer to provide high levels of availability at the DC. In response, management has decided to stock the DCs so that a high level of availability is maintained.THE INVENTORY SERVICE CRISISTo posit the amount of inventory throughout the DeskJet supply chain and at the uniform time provide the high level of service of process needed has been kinda a challenge to Vancouvers management. The manufacturing group has been very successful in reducing the uncertainties caused by delivery to the European DC. Forecasting demand in Europe, though, is a signifi sesst problem. It has become common to have product shortages for mold demands from some countries, while inventory of other models keeps piling up.In the past, the pit inventory levels at the DCs were based on safety stocks that were a case of some judgmental rule of thumb. Specifically, target inventory levels, equal to one-month middling sales, were set for each model carried in the DC. No w, however, it seems that the increasing difficulty of getting accurate forecasts means the safety stock rules should be revisited.HP has put together a team of employees to help implement a scientifically based safety stock system that will be antiphonal to forecast errors and replenishment lead times. They are to recommend a rule for calculating appropriate safety stock levels for the various DeskJet models carried inthe European DC. The team has a good sample of demand data that can be used for developing the safety stock methodology (see Exhibit 17.16). HP hopes this new methodology will solve the inventory and service problem.