1. If demand is aggregated across 9 regions, how would it impact the required safety stock compared to the no aggregation case?

2. How would the safety inventory savings change in each of the following cases?

1. Replenishment lead time doubles.
2. Holding cost double.

3. Why the safety inventory savings decreases as the correlation coefficients increase?

4. Assume aggregating the inventory in a single warehouse increases the transportation cost by $45,000. If a CSL of 95% is desired and the correlation coefficient is estimated to be 0.5 (all other parameters unchanged), is it a feasible choice to aggregate the demand? What if the correlation coefficient is estimated to be 0.2? What is your conclusion?

5. Explain the square-root law. Under what condition is this law valid?

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7. Describe how information aggregation can reduce safety stock. How can Amazon use information aggregation?

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9. Rank the following according to the benefit they provide if kept in a centralized warehouse rather than in stores.

1. A high-value fast-moving item
2. A high-value slow-moving item
3. A low-value fast-moving item
4. A low-value slow-moving item

10. Under what circumstances manufacturer driven one-way substitution is most suitable?

11. Think about a situation in which you had to substitute a product with a similar one. Did it impact your shopping experience negatively? Explain the situation and why it did or did not impact your shopping experience.

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13. Find at least three examples of postponement in different industries.

14. How much will the safety inventory decrease if there are n different paint colors (currently n = 100)? Your response must be a function of n.

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16. How can you use the Excel model to compare the safety stock for a continuous versus periodic review model? Hint: Think about what the review interval T in a continuous review model is.

17. Considering the echelon inventory, find at least three distinct products on Home Depot website for which it is suitable to hold most of the safety inventory upstream in the supply chain (e.g., at the manufacturer). Also find at least three products for which it is suitable to hold most of the safety inventory in stores. Make sure you justify your selections in each case. Also include product images, price, store availability, and delivery time if ordered online.

18. Which one is more beneficial for a firm: longer and predictable lead time, or shorter but unpredictable lead time? Justify your selection.