This competency is described as the ability to systematically and fairly measure what is commonly thought as hidden costs difficult to quantify (INFORMS2010).
Q. In the case study, five scenarios are presented (pages 60-61) but there is no detailed analysis of how the scenarios were identified. Explain how management science could have been used to identify a range of scenarios in this case.
In the article “Accelerating the profitability of HP Supply chain,” the challenge to maintain corporate performance compels that a deeper analysis of simple product movement from end to end be drawn. First off, the industry pace dictates short term product value, whereas older products lose value quickly. Second, the HP operation is described by New York Times as an expansive business offering involving tens of thousands of products in million product configurations. Having the greater chunk of market shares in PCs, printers, and servers in over 170 countries across six continents is held by HP, continuous product entry occurs in the pipeline.
To ensure effective service levels, HP has to contend with severe market diverse. Certain regions have less concentrated demands but high product variety. In which case, the inventory driven costs are considerably fixed values that can be controlled, if not brought to minimum, relative to its volume production. More importantly, these values can be measured and forecast (Davenport 2010, INFORMS2010, Ward et al 2010).
The science behind the formulation of scenarios was pioneered by L. R. Ford. The idea is a particular scenario makes up network flows or a chain of related activities. In a set of scenarios, network flows could be analysed by comparison. The analysis assumes all variables remain unchanged except for a single factor in the supply chain configuration, which is altered deliberately to identify profit variation. Or, the cost structure determined in a particular scenario specifies the level of ...