1. Develop an inventory model for managing the DeskJet printers in Europe assuming that the Vancouver plant continues to produce the six models sold in Europe. Using the data in Exhibit 17.13, apply your model and calculate the expected yearly investment in DeskJet printer inventory in the Europe DC. Answer: 1.In order to calculate the yearly investment in DeskJet printers, we calculate the yearly investment of the printers separately and then add them together to get the total yearly cost. There are 6 versions of the printers, which are A, AA, AB, AQ, AU, AY. The total factory throughput time through the PCAT and FAT stages is about one week. The transportation time from Vancouver to the European DC is five weeks. The plant sends a weekly shipment of printers to Europe. Therefore, the lead time is L=1+5=6 weeks and review time T=1 week. Based on the data in Exhibit 13.14 in the textbook, we use Excel to calculate the average monthly demand (mean) and the standard deviation for each version of the printers (Exhibit 1). In order to calculate the standard deviation of demand over the review and the lead time, we use the formula below: σT+L=√((T+L)) σ2d
Therefore, we can get σT+L for each version, which are listed in the exhibit 2.
2. Compare your results from question 1 to the current policy of carrying one month's average inventory at the DC.
3. Evaluate the idea of supplying generic printers to the Europe DC and integrating the product by packaging the power supply and the instruction manual at the DC just prior to delivery to the European resellers. Focus on the impact on DC inventory investment in this analysis.
4. What is your recommendation to HP?