Exercise 3-Home Depot Logistics

Please Google Ziobro, P. "Retailers Embrace Barer Shelves"WSJJune 28, 2016.It is an article about reducing safety stock and turning inventory faster, seemingly triggered by the issue of servicing internet demand and store demand.So Home Depot plans to put the store back in store by placing all of its local inventory out on the store shelf and replenishing it more often.

It works like this.A large Home Depot store sells 100 fence posts on Monday, Tuesday, Wednesday, Thursday, Friday, Saturday and Sunday: 700 a week every week of the year.Currently to serve this demand (do not consider safety stock) a truck delivers 300 posts on early Monday morning and another 400 fence posts on early Thursday morning before the store opens.The regional Home Depot Center sends seven trucks twice a week (on Monday and Thursday) to the store to deliver the fence posts and a lot of other inventory.

It is proposed to change delivery to a truck every day to the store and this way 100 fence posts a day can be delivered early in the morning (6am) to the store by a truck.

1. What is Home Depot's reduction in average inventory of posts carried each night, over the week.This is the average inventory carried each night of the week for every week of the year. Please explain why.

1. What is Home Depot's reduction in annual average inventory carrying costs of posts if it costs $20 a year to carry a post in inventory in the store?

1. What is being synchronized in this change in process?