Hewlett-pacakrd produces deskjet printers for worlwide, Ask an Expert

Management Studies

Hewlett-Pacakrd produces Deskjet printers for worlwide demand in Vancouver. It is observed that the monthly demand for AB printers at the European Dc averages 15,830 with a standard deviation of 5,624. Each printer costs $100 and HP has a holding cost of 20%. Currently HP ships printers by sea and the delivery lead time from the Vancouver factory to the European DC is 6 months. European DC wants to be able to provide a cycle service level of 90%. HP is considering sending the printers by airfreight instead of sending them by sea. Airfreight will cost an extra $5 per printer but will reduce the delivery lead-time to 1 month. Identify the tradeoff that HP must consider when deciding whether to go with the airfreight option. What would you recommend to HP - ship printers by sea or via air? Why? Justify with a comparison of costs and benefits of the 2 options.

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92060592

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