Question
In 2009, Benson Computers ran a chain of 64 retail stores all over North America. Consider one type of computer sold by Benson. Demand for
In 2009, Benson Computers ran a chain of 64 retail stores all over North America. Consider one type of computer sold by Benson. Demand for this computer at each store on any given day was independently and normally distributed with a mean of 25 units and a standard deviation of 7.5 units. At the beginning of 2010, Benson decided it was time to close their retail stores, put up a website, and begin filling customer orders from a single centralized warehouse. It takes 16 days to ship the computers from the supplier's location to the centralized warehouse.
(a) By consolidating the demand into a single warehouse, what will be the resulting standard deviation of daily demand for this computer faced by Benson (assuming Benson's demand characteristics before and after the consolidation are identical)?
(b) Benson takes physical possession of inventory when it leaves the supplier and grants possession of inventory to customers when it leaves Benson's shipping dock. In the consolidated distribution scenario, what is the expected level of Benson's in-transit inventory of this computer?
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