Hewlett-Packard's (HP) Vancouver Division faced a challenge in 1990. Although its new inkjet printers were selling well, inventory levels worldwide were rising as sales rose. In Europe, high product variety was making inventory levels especially high. HP considered several ways to address the inventory issue
What are the industry characteristics, the product characteristics and the supply chain characteristics?
What has caused the so-called “Inventory / Service Crisis”?
List the important “drivers” of safety stock.
What are the pros and cons of the following proposals mentioned in the A case: a European factory, better forecasting, more inventory.
What is delayed differentiation and how can HP use this concept to address the problems described in the case above? How can the advantages of delayed differentiation be quantified?
How would you evaluate the various alternatives available to Brent Cartier to address the inventory and service problem? For your analysis assume that the DCs follow a periodic review policy and place weekly replenishment orders, and the target item fill rates are 98%. Assess quantitatively the air freight option relative to current operations. Just consider the products for the European market. Do not forget to consider pipeline inventory (since HP owns the pipeline inventory from Vancouver to Europe).