The Hospital Authority (HA) plans to supply different types of face masks to hospitals in 9 districts of Hong Kong. The HA is facing two warehousing options. Option 1 is to operate a decentralized system of 9 warehouses with each warehouse serving one district. Each warehouse orders independently of the other warehouses. Each warehouse faces an average lead-time demand of 30,000 face masks per week with a standard deviation of 2,000 face masks. Option 2 is to use one centralized warehouse to serve the demand of 9 districts. Assume the one-week replenishment lead time is constant and is the same for both options. Show the units and steps of calculation when you answer the following questions.

A. Determine the total safety stock requirement for Option 1 (with 9 warehouses) and Option 2 (with 1 warehouse) if a 99.38% service level is required.

B. Justify the use of Option 1 with THREE reasons from a logistics manager's viewpoint.

C. The HA has decided to adopt Option 1. In the New Territories West district, there are five hospitals, and each has different weekly demand of face masks. The location of hospitals and their average weekly demand of face masks are shown below:

Location

Hospital Demand (units) X-coordinate Y-coordinate

Castle Peak Hospital 3,000 20 110

Siu Lam Hospital 4,000 40 80

Tin Shui Wai Hospital 6,000 60 100

Tuen Mun Hospital 10,000 50 100

Determine the potential warehouse location with X and Y coordinates using "center of gravity" method. From a logistics manager's point of view, discuss THREE factors that the HA should consider before adoption of the location solution determined by the "center of gravity" method.