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  • Short Case Study

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    Yogesh Kumar
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    1. The document discusses whether a contract manufacturer called PE should postpone labeling and packaging of electronics products until the products reach the distribution center (DC) rather than labeling and packaging at the production facility in Malaysia. 2. Currently, PE manufactures and packages products in Malaysia before shipping them to the DC in St. Louis. Postponing packaging could allow PE to use excess inventory of basic products to fulfill any customer order. 3. A team analyzed the impact of postponing packaging on safety inventory levels for computers, printers, and scanners ordered by four major customers. Their analysis will inform a recommendation on whether to postpone packaging to the DC.

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    1. The document discusses whether a contract manufacturer called PE should postpone labeling and packaging of electronics products until the products reach the distribution center (DC) rather than labeling and packaging at the production facility in Malaysia. 2. Currently, PE manufactures and packages products in Malaysia before shipping them to the DC in St. Louis. Postponing packaging could allow PE to use excess inventory of basic products to fulfill any customer order. 3. A team analyzed the impact of postponing packaging on safety inventory levels for computers, printers, and scanners ordered by four major customers. Their analysis will inform a recommendation on whether to postpone packaging to the DC.

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    © All Rights Reserved
    Unduh sebagai PDF, TXT atau baca online dari Scribd
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    112 tayangan1 halaman

    Short Case Study

    Diunggah oleh

    Yogesh Kumar
    1. The document discusses whether a contract manufacturer called PE should postpone labeling and packaging of electronics products until the products reach the distribution center (DC) rather than labeling and packaging at the production facility in Malaysia. 2. Currently, PE manufactures and packages products in Malaysia before shipping them to the DC in St. Louis. Postponing packaging could allow PE to use excess inventory of basic products to fulfill any customer order. 3. A team analyzed the impact of postponing packaging on safety inventory levels for computers, printers, and scanners ordered by four major customers. Their analysis will inform a recommendation on whether to postpone packaging to the DC.

    Hak Cipta:

    © All Rights Reserved
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    Tandai sebagai konten tidak pantas
    dari 1

    M12_CHOP0203_06_SE_C12.

    indd Page 356 26/09/14 11:49 AM f-w-147/203/AW00176/9780133800203_CHOPRA/CHOPRA_SUPPLY_CHAN_MANAGEMENT06_SE_978013

    356 $IBQUFS r .BOBHJOH6ODFSUBJOUZJOB4VQQMZ$IBJO4BGFUZ*OWFOUPSZ

    CASE STUDY
    Should Packing Be Postponed to the DC?
    1FOBOH&MFDUSPOJDT 1&
    JTBDPOUSBDUNBOVGBDUVSFSUIBU previous month when Best Buy did not get its entire order
    produces and packages private-label products for several could have been avoided through postponement. If packag-
    retail chains, including Target, Best Buy, Staples, and ing was shifted to the DC, the lead time of manufacturing
    0GGJDF.BY*OFBDIDBTF UIFCBTJDQSPEVDUTBSFJEFOUJ- BOEUSBOTQPSUJOHUIFCBTJDQSPEVDUGSPN.BMBZTJBXPVME
    cal, with the only difference being the labeling and the continue to be about nine weeks. Labeling and packaging
    packaging. Thus, the labeled and packed version of the were relatively quick steps and the response time from the
    product destined for Target cannot be sent to Best Buy. DC to the customer was not expected to change.
    $VSSFOUMZ BQSPEVDUJPOGBDJMJUZJO.BMBZTJBJTVTFE The DC management was opposed to this idea
    to manufacture, label, and pack all products. The manu- because it would add additional work that was different
    facturing facility replenishes a DC in St. Louis, from from what they had done so far. A detailed study of the
    which the contract manufacturer fills all customer production process had shown that labeling and packag-
    orders. The manufacturing and transportation lead time ing at the DC cost $2 per unit more than the cost of label-
    from Penang to St. Louis is nine weeks. PE uses a con- JOHBOEQBDLBHJOHJO.BMBZTJB%$NBOBHFNFOUCFMJFWFE
    tinuous review policy to manage inventories at its DC that this increase in cost would be held against them once
    BOEBJNTUPQSPWJEFBDZDMFTFSWJDFMFWFMPGQFSDFOU the process was changed, and they would be under con-
    for each product to every customer. stant pressure to lower cost. They also believed it would
    The previous month had been very challenging complicate the work they did when filling an order and
    CFDBVTF #FTU #VZ SFRVFTUFE   BEEJUJPOBM VOJUT could adversely impact customer service.
    beyond what was available at the DC, whereas Target
    PSEFSFE   GFXFS VOJUT BOE 4UBQMFT PSEFSFE   Evaluating the Two Options
    fewer units. Even though there was sufficient product
    To evaluate the two options, a team from both manufactur-
    JOWFOUPSZBWBJMBCMFBUUIF%$ JOUIFGPSNPGUIFCBTJD
    ing and the DC was set up. The team decided to focus its
    QSPEVDU
    1&DPVMEOPUNFFUUIF#FTU#VZSFRVFTUCFDBVTF
    analysis on three major product categories—computers,
    the excess inventory available was labeled and packed for
    printers, and scanners, and four major customers—Target,
    other customers. The DC had leftover inventory from
    #FTU#VZ 4UBQMFT BOE0GGJDF.BY8FFLMZEFNBOEGPS
    Target and Staples, which unfortunately could not be
    FBDIQSPEVDUBOEDVTUPNFSJTTIPXOJO5BCMF*OFBDI
    used to serve Best Buy. PE had lost business and surplus
    DBTF i.FBOuJOEJDBUFTUIFBWFSBHFXFFLMZEFNBOE BOE
    inventory all because of the wrong labels and packaging.
    “SD” indicates the standard deviation of weekly demand.
    All demand was assumed to be normally distributed. PE
    Labeling and Packaging at the DC
    incurred a total cost of $1,000 per computer, $300 per
    The vice president of supply chain at PE proposed post- printer, and $100 per scanner. Given the short life cycle of
    poning the final labeling and packaging to the DC. Her these products, PE used a holding cost of 30 percent when
    logic was that postponing labeling and packaging to the making its inventory decisions. The team analyzed the
    DC would allow PE to use all available inventories to serve impact of postponement on safety inventories before mak-
    any customer. In particular, the situation that arose in the ing a final recommendation.

    TABLE 12-9 Distribution of Weekly Demand by Product and Customer


    Computers Printers Scanners
    Mean SD Mean SD Mean SD
    Target 1,000 700 2,000 1,000 4,000 1,000
    Best Buy 700 600 1,500 800 4,500 900
    Office Max 800 600 1,200 600 2,000 700
    Staples 500 400 900 500 1,400 500

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