Hewlett-Packard Deskjet Printer Supply Chain (a)

Proposals

Pros

Cons

A European Factory

• Shorter lead time
• Faster response to European customers as the market was matured in early 1990        
• More efficient delivery to the DC

• Costly to build (does the demand justify this investment?)
• Difficult to choose location
• Higher fixed and variable costs (e.g. rent, wages, equipments, etc)        

Better Forecasting

• Reduces demand variability .:. Reduces inventory
• Prevent additional costs for storing excess inventories

• May be a significant investment of time and money
• Forecasting method may be unreliable thus resulting in more uncertainties in the long term

More Inventory

• Less stock-outs
• Inventory costs don’t appear on P&L statements, i.e. more inventory won’t affect profit, just assets/liabilities
• Higher profit as a result of higher availability (more sales)

• Not every location needs more inventory
• Holding costs
• Higher production requirements
• Unsold inventories might become obsolete

Air shipments

• Shorter lead time .:. Reduces inventory
• Faster reaction time

• Costly
• Size and weight limitation
• Weather and safety uncertainties