Costs of complexity in Hewlett-Packard's inkjet printer business
Quantifying the costs of complexity in Hewlett-Packard's inkjet printer business
Leaders for Manufacturing Program.
Stephen Graves and Pablo Parrilo.
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This thesis deals with the cost of complexity at Hewlett-Packard's inkjet printer business. The term cost of complexity refers to the costs associated with offering a more diverse portfolio. The most basic example is to consider the situation of increasing the number of items for sale from one to two. As the second item is added setup costs will be incurred since there will now be changeovers from the production of one item to the other. If there are unique components in the added product then there will be additional suppliers to be managed etc. As more and more products are added in search of additional revenue the cost of complexity can rise dramatically. Eventually the costs associated with offering the additional end items can outweigh the incremental revenue earned. While it is easy to measure the revenue from these peripheral offerings it is difficult to determine the associated costs. This combination means that the number of end items offered can grow unabated. In this thesis we examine a framework for analyzing the trade-off between the costs and benefits of offering increased variety.
Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management; and, (S.M.)--Massachusetts Institute of Technology, Dept. of Electrical Engineering and Computer Science; in conjunction with the Leaders for Manufacturing Program at MIT, 2007.Includes bibliographical references (p. 50).
DepartmentSloan School of Management.; Massachusetts Institute of Technology. Dept. of Electrical Engineering and Computer Science.; Leaders for Manufacturing Program.
Massachusetts Institute of Technology
Sloan School of Management., Electrical Engineering and Computer Science., Leaders for Manufacturing Program.