Hp Case Study Question 1

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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 market.

With a universal power supply, the same printer can be sold in both the North American and European markets. Because they can be sold in both markets, this allows for HP to aggregate the demand worldwide instead of forecasting demand in each individual market separately. This will ensure a more accurate forecast. There will still be a long lead-time for manufacturing; however, HP can then delay the individual market forecasts by 2.5 months. Once individual market forecasts are made and the printer engines are shipped to the appropriate DCs is when and where product customization can be made such as fax modems, paper output units, memory, etc.

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.

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