HP Design: Universal Power Supply

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Q2) What are the costs and benefits of universal power supply? •Incorporating an universal power supply into the Rainbow printers increase costs by $30 per printer. •This is a small amount compared to the cost of the engine which totals upto$1000 per printer. •Demand forecasts are a major issue leading to stock outs and inventory pileups. •While the loss in sales per printer costs HP $5000-$6000, along with loss of customers to competitors, inventory pileups lead to discounted sales and transhipment of the inventory can cost between $75 and $60, along with reconfiguration costs of $250 per printer. •Thus, a $30 additional cost on each printer on universal power supply can prevent the higher costs of stock outs and inventory pileups. •Also, HP would be able to aggregate forecasts and reduce lead times and reduce logistics costs in re-transporting.

Q3) How would such costs and benefits be different over the product life cycle? • Ramp-up stage. Here the cost would be of great importance since the increased price due to the universal power supply cost is transferred to them. This increased price plays a role in whether the customer finds the product overpriced and may lead to loss of sales due to this. The benefits of this however is being able to aggregate across markets and is important at this stage, as it would allow for products to be moved across markets if stock outs occur. The reduction of lead times at this stage is of great importance as it will lead to faster time to market and gain customers and provide an edge over competitors. Also, product availability is increased and it will prevent negative publicity caused due to non availability and build brand reputation.

Maturity phase: What is important at this stage is customer’s perception and competitive prices from other printer companies. In this phase the benefits of no reverse logistics is very important as the time taken to get reorders would be shorter. Reduced cost of transportation...
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