HP DeskJet Printers Supply Chain

A case on Basestock Levels and Postponement

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HP DeskJet Printers
Then and Now
The first DeskJet printer

Mobile printer

Color printer

Photo printer

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History of HP
HP founded in 1939 by William Hewlett
and David Packard
1990 revenues $13.2 B and profit $739 M
Then, a manufacturer of electronic test
and measurement equipment
Now, mostly manufactures computers and
peripherals
Peripherals is the second largest group
among six product groups
Peripherals: Printers, Plotters, Magnetic
disc and tape drivers, Terminals and
Network products
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HP Radio Oscillator circa 1939

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, dropping
??% inkjet, increasing; HP is the market leader
??% laser

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Vancouver Plant
Printer production at Fort Collins, CO, Boise, ID, Sunnyvale, CA
and Corvallis, OR is consolidated to the Vancouver site
Vancouver plant uses a pull system
JIT, Kanban, Stockless production

Vancouver had the proper production system

DeskJet printer became its flagship product

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Printer Supply Chain

??
Lead time

Supplier

Supplier

Supplier

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Asia
DC

IC Mfg

PCAT

Print
Mechanism

FAT

Supplier

Europe
DC

Far East
DC

What is Brent Cartiers problem?

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Brent Cartiers problem

Too much inventory in the DeskJet supply chain

Some suggest pumping up more inventory
European and Asian DCs cannot meet because of ?????
mismatch.

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DCs operate as a push or a pull system?

Asia
DC

FAT

Europe
DC

Far East
DC

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What is localization?

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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?

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Can a DC localize?

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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 .
If we want to take on manufacturing processes here, we have
to put processes in place to support them

In conclusion, DC managers are for/against (??)

localizing at DCs.

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What is inventory imbalance?

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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

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Can localization at a DC avoid inventory imbalance?

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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?

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To convince ourselves more

Consider options with monthly demand larger than 1000 in Exhibit 4.

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

AB

20572

20895

19252

11052

19864

20316

13336

10578

6096

14496

23712

9792

AQ

4008

2196

4761

1953

1008

2358

1676

540

2310

2046

1797

2961

AU

4564

3207

7485

4908

5295

90

5004

4385

5103

4302

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?

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Postponing localization to the DCs

Is the US DC manager right?

What problems are possible with localization at DCs?
How to avoid these problems?

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