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HP and Inventory Driven Costs

 HP and Inventory Influenced Costs Essay

п»їSummary daily news Callioni ain al. (2005) Inventory influenced costs (IDC)

This case considers the organization HP, which can be active in the COMPUTER industry. This example handles an industry, which can be highly dynamic, short product life cycles, substantial completion, low margins

Mismatching of demand and supply could lead to excess inventory. The most classic inventory expense item is: holding expense of inventory, which will cover both capital cost of cash and physical costs of obtaining inventory (warehouse space, storage space taxes, insurance, rework breakage, spoilage).

New research leaded for the identification of 4 other types of IDC. 1) aspect devaluation costs: key elements such as microprocessor chips and memory typically drop in price quickly and steeply. The price op a CPU, for example might fall as much as forty percent during 9month life circuit, and the charges for keeping excess parts when a price drop took place could be enormous. Oplossing: Choice to reduce this kind of пѓ reducing the number of nodes in the SC, consolidating developing facilities, taking possession of pieces on a JIT basis, paying the going price at that time and working with suppliers to minimize products on hand when a selling price drop was anticipated. 2) Price security costs: If HP dropped the market price of a merchandise after units already been transported to a revenue channel, completely to repay its channel partners to get the difference for any units that had not but sold, hence the channel spouse didn't have to sell at a loss. Als de prijs a thousand is sobre na a few weken is usually de prijs 950, serta moet HP de 55 euro compenseren aan Mass media Markt. oplossingпѓ Hp had to be certain that channel partners inventory never surpass the lowest number of days required to ensure the desired availability, in order that no excessive inventory needed to be protected. Keep manufacturing turn-around times brief and renewal cycles frequent. Hp provided also to channel associates (media markt) to keep products on hand low. 3) Product return costs: distributors can go back unsold...

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