Hewlett-Packard's (HP) Vancouver Division confronted a test in 1990. In spite of the fact that its new inkjet printers were offering admirably, stock levels worldwide were ascending as deals rose. In Europe, high item mixed bag was making stock levels particularly high. HP considered a few approaches to address the stock issue: air-freighting printers to Europe, growing more formalized stock arranging procedures, or building a processing plant in Europe.
What are the industry characteristics, the product characteristics and the supply chain characteristics?
What has caused the so-called “Inventory / Service Crisis”?
List the important “drivers” of safety stock.
What are the pros and cons of the following proposals mentioned in the A case: a European factory, better forecasting, more inventory.
What is delayed differentiation and how can HP use this concept to address the problems described in the case above? How can the advantages of delayed differentiation be quantified?
How would you evaluate the various alternatives available to Brent Cartier to address the inventory and service problem? For your analysis assume that the DCs follow a periodic review policy and place weekly replenishment orders, and the target item fill rates are 98%. Assess quantitatively the air freight option relative to current operations. Just consider the products for the European market. Do not forget to consider pipeline inventory (since HP owns the pipeline inventory from Vancouver to Europe).