Essay About Case Study And Variable Costs

Hewlett-Packard Deskjet Printer Supply Chain (a)
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Case Study:Hewlett-Packard DeskJet Printer Supply Chain (A)Huaide Huang: 260791906Vikram Jadeja: 260766424Younes Mohamad: 260807438Sarah-Anne O’Connor-Savaria: 260666598Adam Segreti: 260708592  Professor Beste KucukyaziciMGCR 472-005 March 19th, 2019Introduction: Problem Analysis: What  are  the  pros  and  cons  of  the  following  proposals  mentioned  in  the  case: a European factory, better forecasting, more inventory, air shipments.ProposalsProsConsA European FactoryShorter lead timeFaster response to European customers as the market was matured in early 1990        More efficient delivery to the DCCostly to build (does the demand justify this investment?) Difficult to choose locationHigher fixed and variable costs (e.g. rent, wages, equipments, etc)        Better ForecastingReduces demand variability .:. Reduces inventoryPrevent additional costs for storing excess inventoriesMay be a significant investment of time and moneyForecasting method may be unreliable thus resulting in more uncertainties in the long termMore InventoryLess stock-outsInventory costs don’t appear on P&L statements, i.e. more inventory won’t affect profit, just assets/liabilitiesHigher profit as a result of higher availability (more sales)Not every location needs more inventoryHolding costsHigher production requirementsUnsold inventories might become obsolete Air shipmentsShorter lead time .:. Reduces inventory Faster reaction timeCostly Size and weight limitationWeather and safety uncertaintiesRecommendations: Assess  quantitatively  the air freight  option  relative  to  current  operations.  Just consider  the  products  for  the  European  market.  Do  not  forget  to  consider goods-in-transit inventory   (since   HP   owns   the goods-in-transit inventory from Vancouver to Europe).  Would you support to use air freight instead of shipping via sea?Use the excel  sheets  “Analysis”  and  “Cost  Analysis”  in  HP_data  file  and following assumptions: •HP wants to minimize inventory while still achieving at least a 98% annual service level