Supply Chain Management - DeskJet - Essay Example

?Supply Chain Management Assignment A The inventory model that can be developed in regards to the management of the distribution of DeskJet printers to the European Distribution Centers from Hewlett Packard’s plant located in Vancouver is based on the calculation of Economic Order Quantity. The demand for the six models of Hewlett Packard can be determined based on an average scale. It is found that on an average the number of units of the six different DeskJet printers produced by Hewlett Packard comes to around 23,109 units. The average produce is calculated based on the total produce i.e. 277, 303 units divided by the number of months. The ordering cost of producing each printer incurred by the company is stated to be $250. Based on the above data the carrying cost of each of the several units is assumed to be around $21. Moreover the lead time required to dispatch the products from the Vancouver centre to the European Distribution Centers is observed to be 35 days. Given the above conditions the economic order quantity that ought to be produced by the firm can be calculated as: Square Root of (2 * Average Demand* Cost of Order/ Cost of Carrying) or it arrives to under Square Root of (2* 23109* 250/21). Herein the Economic Order Quantity based on the above model turns out to be 742 units approx. The cost of production of each unit by the company is observed to be given as $250. Thus the yearly investment based on the economic quantity calculated comes to around $250 * 742 units i.e. $185,500 on an average. A.2. The calculation of economic order quantity would help the company in reducing the cost pertaining to the production of DeskJet printers through the management of the flow of raw materials. The calculation of economic order quantity would also help the management in reducing the level of distribution costs of the printer gadgets from Vancouver to the European Distribution Centers. Production costs being low would help the company in enhancing the distribution mechanisms thereby reducing the amount of lead time spent on the above dispatches. Moreover it is also found that such calculation would help the company management in effectively managing the piling up of stock orders in the Vancouver distribution center and thus would help the concern to maximize the capital utilization process. Less amount of working capital would be expended or locked for the above reason and thus would help the company gain more profits. Further the problems relating to effective stock management in regards to the delivery of the same from the Vancouver center to the European distribution houses can be effectively managed in which the issues relating to piling up or shortage of stock in some quarters can be effectively addressed. Thus by depending on the above model of economic order quantity the company can both manage the level of inventory flow from Vancouver to the European distribution houses and also the cost factor related to such (Chase et. al, 684). A.3. The Company focuses on making the DeskJet printers more customized through the modification conducted in the technical aspects of the products to help intake lesser voltage. This process of customization is conducted in the several European distribution centers where separate installations are made inside the printer to help the local population gain advantage from spending less power on such products. The cost of power being saved would help to enhance the demand for the same in the local markets and thus would also help the company to gain large amount of business profits. Moreover the factor of consumer loyalty would also be enhanced based on the above reason wherein the consumers would aptly feel cared by the company in helping them reduce the costs related to power usage. Again Hewlett Packard also helps to enhance the process of customization or localization through the rendering of manuals pertaining to the use of the gadgets inside the packaging boxes. These manuals would be written specifically in local languages which would help the local people to gain a more detailed understanding of the manner in which such printers would be used. This process of communication practiced by the company would help the company a huge base of loyal customers who would not switch over to other foreign printing companies. However the above practice must be strongly linked with the economic quantity the company needs to produce focusing on the investment generated for making the different printers. Thus the order management of the specific raw materials in addition to the putting in of the installation gadgets and power plugs can be effectively maintained based on the ordering quantities to help gain more returns on the investment conducted (Chase et. al, 685). A.4. Useful recommendations that can be placed to Hewlett Packard in regards to the above situation are that it first needs to economically order the raw materials from the vendors and thereby to effectively manage the level of investments related to such. Focusing on the calculation of the economic order quantity the company can manage the level of orders required to be placed for the raw materials and similarly the packaging and other gadget and installation costs adhered to such. Similarly the production of the printers can be effectively controlled to help the company avoid the issue of stock piling and stock shortages. This fact would help the company in managing the level of inventories in several aspects related to both production and sales and thus to incur salient profits in that direction. Calculation of the economical level of the order quantities also would help the company in effectively and optimally managing the warehouse space and also the level of working capital adhered to such. Again the company through saving on its investments related to the production of such products can effectively work to reduce the lead time adhered to the delivery of the printers to the end customers. Delivery time being reduced along with other value additions in the services rendered would help the company gain enhanced attention of the consumers. Reference Chase, Richard B. et. al. Operations Supply management. Tata McGraw-Hill Education. 2010. Read More