Inventory at multiple locations: The Square Root Rule.

You operate a fashion retail store and using an online B$2$C channel for your products for a few years. Currently your supply chain consist of $2$ distribution centers $($DCs$)$ while you estimate having $$500,000$ in safety stock holding costs across your $2$ DCs$.$

To reduce shipping costs, management has decided to open $6$ additional DCs$.$ Due to regional locations, management sees demand as independent among locations. We also assume demand variance; the holding and penalty costs are same across all locations. The holding cost would be $?$

Group of answer choices

Your inventory holding cost will decrease

Your inventory holding cost will stay the same

The more inventory you have, the less likely you are to have what you need

Your inventory holding cost will increase