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If the standard lead time for a continuous review inventory policy, where a supplier is serving all regional locations, is 2 weeks, does the lead
If the standard lead time for a continuous review inventory policy, where a supplier is serving all regional locations, is 2 weeks, does the lead time change if the model remains a continuous review inventory policy, but a centralized warehouse is added to serve four of the regional locations, Atlanta, Boston, Chicago, Dallas, but the fifth location, Los Angeles, is continuing to be served by the supplier directly? Please refer to the below question and the data for more reference. I just need to know what changes with the lead time. Are they all still being served under a 2 week lead time? Or does the echelon lead time change? And if so, what does it change to?
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- Suppose a new, centralized warehouse is added to serve Atlanta, Boston, Chicago, and Dallas as shown in Figure 1c. The manufacturing facility will continue to serve the Los Angles warehouse given its proximity and newly added centralized warehouse. Assuming that all warehouses are following the continuous review inventory policy, compute and describe its inventory management policy and associated cost. Keep in mind that the centralized warehouse is one echelon above regional warehouses. Ignore inbound and outbound transportation cost. Provide answers and calculations for order quantity, demand during lead time, safety stock, average inventory level, inventory holding cost per week, ordering cost per week, and total cost per week. Compare ordering, holding, and total cost of this distribution system with your answers to questions 1 and 2. Which distribution system has the lowest cost out of all three described? Comment on your findings.