1. HP is in an inventory crisis. What should it do? Qualitatively evaluate the options given in case A: (a) Build a new European factory, (b) Utilize air shipments for Europe (c) Do better forecasting (d) Reduce customer service by lowering fill rate (e) Keep more inventory.
a) HP has 3 distribution centers. Those of Europe and Asia Pacific Distribution Centers are in an inventory crisis. Especially crisis is becoming deeper in European Distribution Center. Is it a solution of building a new factory in Europe? Actually building a new factory would create additional costs such as instructing a new factory building, process costs, financial costs of new investment etc. However we can think about advantages of building new factory in Europe too. First of all the localization of the desk jet printers for European Countries has already been providing by Vancouver Divisions. If HP builds a new factory in Europe assembling the appropriate power supply modules for the correct voltage requirements, power cord convertor and printer manual that written in the local languages would provide by European Plant. Secondly shipping times will reduce from 4-5 weeks to 4-5 days and shipping costs will reduce respectively. Thirdly opening a new fabric in the one of the Eastern European Countries which is The European Union Member, provides customs free for all over the Europe and cheap labor for Hp products. Therefore product costs would reduce sharply.
b) The Traffic Department Supervisor Kay Johnson suggests this idea in the case but in our opinion since printers are heavy products it’s costly to shipping them via airway. If we were talk about textile products it would be a good way for shortening shipping time and providing lower inventory. But printers are not as light as textile products. Of course HP can use this way for some specific unexpected changes in product mix but in general it’s not a useful way for heavy products.
c) Doing better...