Sydicate 11

Class : YP - 55A
ISNAN HIDAYAT
REZA PRIA UTAMA
RIDHO RIADI AKBAR

29115149
29115155
29115193

DeskJet Demand Data from Europe

Europe
Options
A
AB
AU

NOV

DEC

JAN

FEB

MAR

APR

AA
AQ
AY

80
20,572
4,564
400
4,008
248

20,895
3,207
255
2,196
450

60
19,252
7,485
408
4,761
378

90
11,052
4,908
645
1,953
306

21
19,864
5,295
210
1,008
219

48
20,316
90
87
2,358
204

TOTAL

29,872

27,003

32,344

18,954

26,617

23,103

By calculating the co-ef of variance, the degree of variance of the demand with re
determined. The models with less co-ef of v ariance are comparitively having sta
the others.

Europe
Options
A
AB
AU

NOV

DEC

JAN

FEB

MAR

APR

AA
AQ
AY

80
20,572
4,564
400
4,008
248

20,895
3,207
255
2,196
450

60
19,252
7,485
408
4,761
378

90
11,052
4,908
645
1,953
306

21
19,864
5,295
210
1,008
219

48
20,316
90
87
2,358
204

TOTAL

29,872

27,003

32,344

18,954

26,617

23,103

From the above caculated probablities, it is clear that with the existing system the chance
stock out are high for all the models. The need for more saftey stock is there.

1) Considering the probability as 98% for all the models, we will now find out the safety
requirements.
Europe
Options
A
AB
AU
AA

NOV
80
20,572
4,564
400

DEC
20,895
3,207
255

JAN
60
19,252
7,485
408

FEB
90
11,052
4,908
645

MAR
21
19,864
5,295
210

APR
48
20,316
90
87

AQ
AY

4,008
248

2,196
450

4,761
378

1,953
306

1,008
219

2,358
204

2) Considering the probability as 98% for models with high co-ef of variance( AU,AQ,AA)
80% for models with low co-ef of variance (A,AY,AB).

Europe
Options
A
AB
AU
AA
AQ
AY

NOV
80
20,572
4,564
400
4,008
248

DEC
20,895
3,207
255
2,196
450

JAN
60
19,252
7,485
408
4,761
378

FEB
90
11,052
4,908
645
1,953
306

MAR
21
19,864
5,295
210
1,008
219

APR
48
20,316
90
87
2,358
204

3) If localization is done at the European DC, then generic printers can be kept as invent
and can be distributued. Considering the variation in overall demand, co-ef of variance fo
total demand is 0.27 from the first table. So, lets assume 85% as the probability of stock

Europe
Options
A
AB
AU

NOV

DEC

JAN

FEB

MAR

APR

AA
AQ
AY

80
20,572
4,564
400
4,008
248

20,895
3,207
255
2,196
450

60
19,252
7,485
408
4,761
378

90
11,052
4,908
645
1,953
306

21
19,864
5,295
210
1,008
219

48
20,316
90
87
2,358
204

TOTAL

29,872

27,003

32,344

18,954

26,617

23,103

MAY

JUN

JUL

AUG

SEP

OCT

13,336
432
1,676
248

9
10,578
5,004
816
540
484

20
6,096
4,385
430
2,310
164

54
14,496
5,103
630
2,046
363

84
23,712
4,302
456
1,797
384

42
9,792
6,153
273
2,961
234

15,692

17,431

13,405

22,692

30,735

19,455

ce of the demand with respect to mean is

comparitively having stable demand than

MAY

JUN

JUL

In the existing model, the target inventory level is equal to the m

When we compare the obtained R with the SS included, then the

AUG

SEP

OCT

13,336
432
1,676
248

9
10,578
5,004
816
540
484

20
6,096
4,385
430
2,310
164

54
14,496
5,103
630
2,046
363

84
23,712
4,302
456
1,797
384

42
9,792
6,153
273
2,961
234

15,692

17,431

13,405

22,692

30,735

19,455

isting system the chances for

ock is there.

Now as we now that there are high chances of stock out, we will find
using the FIXED-QUANTITY MODEL.

now find out the safety stock

MAY
13,336
432

JUN
9
10,578
5,004
816

JUL
20
6,096
4,385
430

AUG
54
14,496
5,103
630

SEP
84
23,712
4,302
456

OCT
42
9,792
6,153
273

1,676
248

540
484

2,310
164

2,046
363

1,797
384

2,961
234

f of variance( AU,AQ,AA) and

MAY
13,336
432
1,676
248

JUN
9
10,578
5,004
816
540
484

JUL
20
6,096
4,385
430
2,310
164

AUG
54
14,496
5,103
630
2,046
363

SEP
84
23,712
4,302
456
1,797
384

OCT
42
9,792
6,153
273
2,961
234

ers can be kept as inventory

and, co-ef of variance for the
s the probability of stock out.

MAY

JUN

JUL

AUG

SEP

OCT

13,336
432
1,676
248

9
10,578
5,004
816
540
484

20
6,096
4,385
430
2,310
164

54
14,496
5,103
630
2,046
363

84
23,712
4,302
456
1,797
384

42
9,792
6,153
273
2,961
234

15,692

17,431

13,405

22,692

30,735

19,455

Mean

Std. Dev
42
15830
4208
420
2301
307
23109

co-ef of variance

32.4
5624.6
2204.6
203.9
1168.5
103.1
6244.0

0.7717393776
0.3553113457
0.5239028324
0.4855400686
0.5078197935
0.3359052248
0.2701960343

el, the target inventory level is equal to the mean. So, we can calculate the Z values of respective models. R=

the obtained R with the SS included, then the Z value can be found out.

Mean

Std. Dev
42
15830
4208
420
2301
307
23109

32.4
5624.6
2204.6
203.9
1168.5
103.1
6244.0

Z=(R-d*L)/std.dev for L
-0.6478871164
-1.4072165331
-0.9543754473
-1.0297811289
-0.9846012432
-1.4885151021
-1.8505082846

here are high chances of stock out, we will find out the saftey stocks with different prbabiilties
NTITY MODEL.

Mean

Std. Dev
42
15830
4208
420

32.4
5624.6
2204.6
203.9

std.dev for lead time

38.1550149366
6620.9707200113
2595.1242417154
240.0523947287

2301
307

Mean

1168.5
103.1

Std. Dev
42
15830
4208
420
2301
307

Mean
Std. Dev
co-ef of variance
std.dev for lead time
R
SS
Average Inventory
Holding cost

32.4
5624.6
2204.6
203.9
1168.5
103.1

23109
6244.0
0.270196
7350.076
42160.58
7497.077
24828.83
1551802

1375.4915293458
121.3910901456

std.dev for lead time

38.1550149366
6620.9707200113
2595.1242417154
240.0523947287
1375.4915293458
121.3910901456

std.dev for lead time

38.1550149366
6620.9707200113
2595.1242417154
240.0523947287
1375.4915293458
121.3910901456
7350.0755001043

values of respective models. R=d*L .

probability G(Z)
26%
8%
17.10%
15.50%
16.20%
6%
3%

erent prbabiilties

R
141.21778062
37317.9899760231
11632.0046955166
1122.1074091939

SS
78.21778
13572.99
5320.005
492.1074

Average Inventory

Holding Cost

109.71778062 6857.3612887518
25445.4899760231 1590343.12350144
8476.0046955167 529750.29346979
807.1074091939 50444.2130746165

6271.257635159 2819.758
709.3517347985 248.8517

R
95.4317626961
29372.8251120096
11632.0046955166
1122.1074091939
6271.257635159
563.6824266238

4545.507635159 284094.227197434
479.1017347985 29943.8584249084
Total cost
2491433.07695695

SS

Average Inventory

Holding Cost

32.43176
5627.825
5320.005
492.1074
2819.758
103.1824

63.9317626961
17500.3251120096
8476.0046955167
807.1074091939
4545.507635159
333.4324266238
Total cost

3995.7351685068
1093770.3195006
529750.29346979
50444.2130746165
284094.227197434
20839.5266639864
1982894.31507493

Evaluate the idea of supplying generic printers to the Europe DC and integrating the
1
2
3
4

Doing the integration process in the DCs would have positive results on the business inventory
With that, it would also create higher local market presence because they will have the capabili
The value of the transit inventory will also go down because their focus will be on the generic p
But, one disadvantage of the localization process that is being done in the DCs, it is the quality

pe DC and integrating the product by packaging the power supply and the instruction manual at

lts on the business inventory management. This would create significant reduction on their freight cost and
se they will have the capability to meet the local standards in terms of language, electrical specifications, et
ocus will be on the generic product. In terms of packaging, it will also decrease which is helpful to the enviro
e in the DCs, it is the quality will not be as good as the time when the product is done in the companys Van

struction manual at the DC just prior to delivery to the European re sellers. Focus on t

their freight cost and custom du

ical specifications, etc.
s helpful to the environment.
in the companys Vancouver m

What is your recommendation to HP?

1
2
3
4
5
6
7
8
9

Localization at the DCs should be done to lower down cost at the manufacturing site.
It is recommended that HP proceed with the localization of the deskjet printer in the DCs.
It will not only lower the shipping cost but also allow HP to focus more on the local needs in each
However, they must implement an effective quality assurance policy to continue providing produc
Air shipment should be used in transporting the printers.
Restructuring the product line to see where HP can further save in manufacturing cost
Apply lean manufacturing model
Build a factory in Europe
Improve forecasting methods

r in the DCs.
local needs in each of its DCs.
nue providing products with same quality as the ones being manufactured at the Vancouver manufacturing cent

uver manufacturing center.