Hp Case Report - Operations Management - 2822 Words

HP Case Report 1. Causes for the Inventory Problem: HP was used to guarantee maximum order fill without putting major attention to stock level. The inventory problem was raised from a corporate order that business needed to meet customer needs with less inventory quantities. In fact, the situation was increasingly deteriorating due to the growing sales in European and Asian-Pacific, resulting in increased inventory levels to ensure satisfactory product availability. From our point of view, the main reasons for this crisis were: †¢ †¢ †¢ †¢ †¢ Customer loyalty was dropping, which increased the pressure to ensure quick satisfaction of costumers’ orders and avoid loss of sales. This fact, associated with a dramatic growth of sales†¦show more content†¦In fact, the uncertainty of the demand, which due to the known bullwhip effect will increase as we move from customers to the factory, indicates that an overall optimum inventory solution cannot be achieved independently and in a non-coordinated manner. For this specific case the analysis will concentrate on managing adequately the inventory of the European distribution center for all the product options. For such an analysis a Fixed Order Interval (FOI) multi-period model was considered with two variants concerning aggregation of demand: o Non-Aggregated Demand of product options o Aggregated demand of product options 3 Operations Management Model Application and Assumptions The application of the referred FOI model is based on the following assumptions: o Each month is considered to have four weeks o The demand function is assumed to be Normal distributed and to have a constant mean and standard deviation through time. It is also assumed that the weekly means and standard deviations are the same in every week. o The desired service level is at 98% (same as FILR = 98%) o The period time (T) between placement of orders is constant and equal to one week o The transport lead time (L) is analyzed for two cases (4 weeks and 5 weeks) o The factory works onShow MoreRelatedAnalysis of HPs Annual Report640 Words   |  3 Pageschoose to concern myself with in this text is Hewlett Packard - HP. 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