Assuming a service level of 99% for all parts, what will be the impact on the total inventory investment if the number of warehouses is reduced from 8 warehouses to 2? Reduced to 1? Assume that each of the 8 warehouse has roughly equal demand and, when consolidating the warehouses, the total demand across all 8 warehouses is equally divided between the remaining warehouses.

a.Using data from Exhibit 3, complete the table below.

Exhibit 3 Information on Representative Products Griffin 500ml Erlenmeyer Beaker 500ml Flask 2009 units sold 11 268 3.389 Percent of all units sold 0.1% 0.03% Annual carrying cost (%) 14% 14% Unit price $ 6.80 $ 9.50 Unit cost 3.96 $ 4.56 Cost of underage $ 0.48 S 0.49 Cost of overage $ 0.021 $ 0.025 Optimal service level 95.8% 95.3% Average bi-weekly demand ($ warehouses) 54.2 16.3 Standard deviation of bi-weekly demand (8 warehouses) 21.4 109 Average bi-weekly demand (2 warehouses) 216.7 65.2 Standard deviation of bi-weekly demand (2 warehouses) 38.3 19.5 Average bi-weekly demand (1 warehouse) 433.4 130.3 Standard deviation of bi-weekly demand (1 warehouse) 51.0 26.0Product Griffin Beaker Erlenmeyer Flask # of Warehouses B 1 2 1 Z-Value 2.33 2.33 2.33 2.33 2.33 2.33 Average Weekly Demand Stdey of Weekly Demand POU (weeks) Calculations Average Pipeline for 1 Inventory warehouse Begin on hand SS Average On Hand Average Inventory for 1 Warehouse Total Average Inventory (all warehouses)