Comm 399

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Instructor: Daniel Ding

COMM 399-204

Due: 13pm Mar 20, Wednesday

Assignment 3
Analyze Hewlett-Packard – Supply the DeskJet Printer in Europe Case (CJA chapter “Inventory Control”; see the course package). Answer questions 1, 3, and 4 given at the end of the case (question 2 is not required). Discussions are permitted within a group of at most 3 students, but everyone has to submit their own assignment and it cannot be an identical copy! Paperversion is preferred. For your convenience, I have prepared a spreadsheet (Assignment3_HP.xls) in the assignment folder on connect. It may save lots of your time if you work on the excel. If you choose to use excel, be sure to include the excel spreadsheet when you submit your assignment. Please use hints that are provided below. • In comparing different options (localization of a generic printer at DCs or not), you need to quantify the benefits from each. The best way to do that is to use the inventory models to calculate the total cost of inventory per unit (for all DeskJet models) under different options. • Use demand data from the exhibit 13.16. For your convenience, the monthly and weekly mean and standard deviation for six models as well as generic printers have been calculated in the spreadsheet Assignment3_HP.xls

• Assume 1 month = 4.33 weeks • Assume a 98% service level. The z value to ensure a 98% Service level is 2.06. • Note that this is a fixed time period (R,T) model with review period T= 1 week. • Lead time for ocean transit = 5 weeks • While calculating annual inventory costs, remember to include pipeline (in-transit) inventory, safety stock, and cycle stocks (because in this case, HP is responsible for all these costs).

• The annual average inventory cost is computed as follows: Annual Average Inventory Cost = (Safety Stock + Average In-Transit Inventory + Average Cycle Inventory) ×(unit cost) × (percent carrying cost). Note that in a fixed time period model, the ordering cost is fixed and can...
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