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Hp Case Study Question 1

570 words - 3 pages

1. In what way is a universal power supply a postponement strategy?

Previously, printers in North American and European markets required different power supplies and associated fusers in the main engine of the printer. North American Printers required a 110-volt power supply where European printers required a 220-volt power supply. HP’s Japanese partners manufactured the printer engines offshore. HP had to specify the requirements of the two types of printers at least fourteen weeks ahead because of the long lead times for engine manufacturing. With earlier printer models, HP’s inaccurate forecasts led to either an excess or shortage of inventory in either the North American or European DCs. Because the printers required different power supplies it was not easy to have inventory from one market shipped to the other to be reconfigured and sold in that ...view middle of the document...

2. What are the costs and benefits of a universal power supply?

The main cost of the universal power supply design is the quoted $30 increase in cost per unit. This was a cost estimate that was quoted from HPs Japanese partners. This quoted increase in material cost had a huge impact on how HP was going to justify the universal power supply.

There are many benefits for incorporating the universal power supply to the Rainbow printer design. The first being the ability to delay individual market demand until manufacturing is complete. HP could aggregate the demand globally, which will be far more accurate than forecasting by individual market. This will help to reduce shortages and therefore increase service levels. With printers, the cost of a loss of a sale can be ananalysed as being much more than just the profit that was lost from the one printer sale.

Another benefit to the universal power supply design is the new ability to transship with ease. In the past, transshipment was possible but not efficient or by any means an easy process to implement. Transshipment is the implemented when one DC experiences a shortage where another simultaneously experiences and surplus. Transshipment allows for the DC with a surplus to ship product to the DC with a shortage so they can fill demand.

HP would still have its Japanese partners manufacture the printer’s main engine. The components such as power supply and fuser unit can be fully integrated with the printer circuit board from HP’s Boise factory in Japan where the printer engines are being manufactured.

Because of inaccurate forecasts, HP ended up with excess or shortage of inventory in either the North American market or European market. For example, with the VIPER model, the European DCs completely sold out of the product whereas the North American DCs had a huge surplus of inventory. One approach HP made to deal with this issue was

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