DeskJet Demand Data from Europe

Europe
Options
A
AB
AU
AA
AQ
AY

TOTAL

NOV

DEC

JAN

FEB

MAR

APR

MAY

80
20,572
4,564
400
4,008
248
29,872

20,895
3,207
255
2,196
450
27,003

60
19,252
7,485
408
4,761
378
32,344

90
11,052
4,908
645
1,953
306
18,954

21
19,864
5,295
210
1,008
219
26,617

48
20,316
90
87
2,358
204
23,103

13,336
432
1,676
248
15,692

By calculating the co-ef of variance, the degree of variance of the demand with respect to mean is
determined. The models with less co-ef of v ariance are comparitively having stable demand than the
others.

Europe
Options
A
AB
AU
AA
AQ
AY

TOTAL

NOV

DEC

JAN

FEB

MAR

APR

MAY

80
20,572
4,564
400
4,008
248
29,872

20,895
3,207
255
2,196
450
27,003

60
19,252
7,485
408
4,761
378
32,344

90
11,052
4,908
645
1,953
306
18,954

21
19,864
5,295
210
1,008
219
26,617

48
20,316
90
87
2,358
204
23,103

13,336
432
1,676
248
15,692

From the above caculated probablities, it is clear that with the existing system the chances for stock
out are high for all the models. The need for more saftey stock is there.

1) Considering the probability as 98% for all the models, we will now find out the safety stock
requirements.
Europe
Options
A
AB
AU
AA
AQ

NOV

DEC

JAN

FEB

MAR

APR

MAY

80
20,572
4,564
400
4,008

20,895
3,207
255
2,196

60
19,252
7,485
408
4,761

90
11,052
4,908
645
1,953

21
19,864
5,295
210
1,008

48
20,316
90
87
2,358

13,336
432
1,676

AY

248

450

378

306

219

204

248

2) Considering the probability as 98% for models with high co-ef of variance( AU,AQ,AA) and 80% for
models with low co-ef of variance (A,AY,AB).

Europe
Options
A
AB
AU
AA
AQ
AY

NOV

DEC

JAN

FEB

MAR

APR

MAY

80
20,572
4,564
400
4,008
248

20,895
3,207
255
2,196
450

60
19,252
7,485
408
4,761
378

90
11,052
4,908
645
1,953
306

21
19,864
5,295
210
1,008
219

48
20,316
90
87
2,358
204

13,336
432
1,676
248

3) If localization is done at the European DC, then generic printers can be kept as inventory and can
be distributued. Considering the variation in overall demand, co-ef of variance for the total demand is
0.27 from the first table. So, lets assume 85% as the probability of stock out.

Europe
Options
A
AB
AU
AA
AQ
AY

TOTAL

NOV

DEC

JAN

FEB

MAR

APR

MAY

80
20,572
4,564
400
4,008
248
29,872

20,895
3,207
255
2,196
450
27,003

60
19,252
7,485
408
4,761
378
32,344

90
11,052
4,908
645
1,953
306
18,954

21
19,864
5,295
210
1,008
219
26,617

48
20,316
90
87
2,358
204
23,103

13,336
432
1,676
248
15,692

JUN

JUL

AUG

SEP

OCT

9
10,578
5,004
816
540
484
17,431

20
6,096
4,385
430
2,310
164
13,405

54
14,496
5,103
630
2,046
363
22,692

84
23,712
4,302
456
1,797
384
30,735

42
9,792
6,153
273
2,961
234
19,455

mand with respect to mean is

ly having stable demand than the

Mean

Std. Dev
42
15830
4208
420
2301
307
23109

32.4
5624.6
2204.6
203.9
1168.5
103.1
6244.0

In the existing model, the target inventory level is equal to the mean. So, we can calculate the Z va
When we compare the obtained R with the SS included, then the Z value can be found out.

JUN

JUL

AUG

SEP

OCT

9
10,578
5,004
816
540
484
17,431

20
6,096
4,385
430
2,310
164
13,405

54
14,496
5,103
630
2,046
363
22,692

84
23,712
4,302
456
1,797
384
30,735

42
9,792
6,153
273
2,961
234
19,455

he chances for stock

Mean

Std. Dev
42
15830
4208
420
2301
307
23109

32.4
5624.6
2204.6
203.9
1168.5
103.1
6244.0

Now as we now that there are high chances of stock out, we will find out the saftey stocks with differ
the FIXED-QUANTITY MODEL.

he safety stock

JUN

JUL

AUG

SEP

9
10,578
5,004
816
540

20
6,096
4,385
430
2,310

54
14,496
5,103
630
2,046

84
23,712
4,302
456
1,797

OCT
42
9,792
6,153
273
2,961

Mean

Std. Dev
42
15830
4208
420
2301

32.4
5624.6
2204.6
203.9
1168.5

484

164

363

384

307

234

103.1

U,AQ,AA) and 80% for

JUN

JUL

AUG

SEP

OCT

9
10,578
5,004
816
540
484

20
6,096
4,385
430
2,310
164

54
14,496
5,103
630
2,046
363

84
23,712
4,302
456
1,797
384

JUN

JUL

AUG

SEP

OCT

9
10,578
5,004
816
540
484
17,431

20
6,096
4,385
430
2,310
164
13,405

54
14,496
5,103
630
2,046
363
22,692

84
23,712
4,302
456
1,797
384
30,735

42
9,792
6,153
273
2,961
234
19,455

Mean

Std. Dev
42
15830
4208
420
2301
307

42
9,792
6,153
273
2,961
234

32.4
5624.6
2204.6
203.9
1168.5
103.1

as inventory and can

or the total demand is

Mean
Std. Dev
co-ef of variance
std.dev for lead time
R
SS
Average Inventory
Holding cost

23109
6244.0
0.270196
7350.076
42160.58
7497.077
24828.83
1551802

co-ef of variance

std.dev for lead time

0.771739378
0.355311346
0.523902832
0.485540069
0.507819794
0.335905225
0.270196034

38.15501494
6620.97072
2595.124242
240.0523947
1375.491529
121.3910901
7350.0755

mean. So, we can calculate the Z values of respective models. R=d*L .

he Z value can be found out.

Z=(R-d*L)/std.dev for L

probability G(Z)

-0.647887116
-1.407216533
-0.954375447
-1.029781129
-0.984601243
-1.488515102
-1.850508285

26%
8%
17.10%
15.50%
16.20%
6%
3%

nd out the saftey stocks with different prbabiilties using

std.dev for lead time

38.15501494
6620.97072
2595.124242
240.0523947
1375.491529

R
141.2177806
37317.98998
11632.0047
1122.107409
6271.257635

SS
78.21778
13572.99
5320.005
492.1074
2819.758

Average Inventory
109.7177806
25445.48998
8476.004696
807.1074092
4545.507635

121.3910901

709.3517348 248.8517

479.1017348
Total cost

std.dev for lead time

38.15501494
6620.97072
2595.124242
240.0523947
1375.491529
121.3910901

R
95.4317627
29372.82511
11632.0047
1122.107409
6271.257635
563.6824266

SS

Average Inventory

32.43176
5627.825
5320.005
492.1074
2819.758
103.1824

63.9317627
17500.32511
8476.004696
807.1074092
4545.507635
333.4324266
Total cost

Holding Cost
6857.361289
1590343.124
529750.2935
50444.21307
284094.2272

29943.85842
2491433.077

Holding Cost
3995.735169
1093770.32
529750.2935
50444.21307
284094.2272
20839.52666
1982894.315