Use tables below to solve: For SKUs - CBL290 & CBL 500: a. What is the total inventory cost savings (cycle stock and safety stock) associated with a centralized warehouse compared to the decentralized warehouses? Assume the cost of inventory is 75% of the sales price two SKUs identified above: b. For a 95% service rate, what is the total safety stock inventory for each SKU under the decentralized warehouse structure?

c. For a 95% service rate, what is the safety stock inventory for each SKU under a centralized warehouse structure?

d. Compared to the decentralized structure, what is the percent reduction in safety stock for each SKU with the centralized structure?

CABLE SKUS AT DISTRIBUTOR
					AVERAGE INVENTORY AT WAREHOUSE
SKU	AVG. SELLING PRICE	RANK	SKU CATEGORY	CASE QTY	WAREHOUSE 10	WAREHOUSE 20	WAREHOUSE 30	WAREHOUSE 40	WAREHOUSE 70
CBL150	$6.38	B	S	100	34	-	68	37	37
CBL151	$8.17	A	S	30	101	100	141	73	73
CBL152	$12.02	B	S	25	136	41	37	15	15
CBL153	$5.88	B	C	80	235	65	125	114	114
CBL154	$6.28	A	C	60	272	248	275	206	206
CBL155	$4.45	B	S	80	53	-	25	36	36
CBL156	$4.44	B	C	80	86	36	47	41	41
CBL157	$6.66	A	C	40	302	134	135	350	350
CBL158	$6.69	A	S	50	364	17	46	17	17
CBL200	$9.61	B	S	60	28	20	13	18	18
CBL260	$3.30	Y	C	120	12	12	9	24	24
CBL261	$2.60	Y	C	120	24	-	-	37	37
CBL275	$2.15	B	S	800	298	93	258	37	37
CBL290	$6.00	A	C	200	307	81	524	157	157
CBL291	$7.84	B	C	120	118	-	44	31	31
CBL292	$10.00	B	C	25	39	16	37	31	31
CBL293	$6.22	B	C	150	36	6	26	39	39
CBL294	$91.48	B	S	3	12	10	10	7	7
CBL295	$154.92	B	S	6	17	-	2	6	6
CBL296	$2.90	B	C	500	121	-	37	12	12
CBL300	$2.61	A	C	80	105	54	129	106	106
CBL301	$2.61	C	C	80	119	-	-	11	11
CBL302	$2.61	C	C	80	21	-	-	-	13
CBL303	$2.61	C	C	80	88	-	22	-	8
CBL304	2.61	C	C	80	7	-	15	-	10
CBL305	$2.61	C	C	80	21	6	12	23	23
CBL306	2.61	C	C	80	9	7	70	73	73
CBL307	$3.91	C	C	60	15	-	20	18	18
CBL308	$3.32	B	C	60	21	32	9	31	31
CBL500	$125.59	B	C	1	10	-	2	4	4
CBL501	$129.95	C	C	2	11	-	5	3	3
CBL600	$1.15	C	C	150	21	8	39	11	11
CBL601	$0.90	A	C	500	175	116	141	129	129
CBL602	$2.39	A	C	200	280	42	229	383	383
RANK: A= HIGH DEMAND; B=MEDIUM DEMAND; C=LOW DEMAND; Y=DISCONTINUED SKU CATEGORY: C=COMMODITY ITEM; S=HARD-TO-FIND AVERAGE INDUSTRY LEVELS IN NUMBER OF UNITS

	MONTHLY DEMAND
			WAREHOUSE 10		WAREHOUSE 20		WAREHOUSE 30		WAREHOUSE 40		WAREHOUSE 70		TOTAL
SKU	AVG SELLING PRICE	AVG MONTHLY SALES	STANDARD DEVIATION	AVERAGE MONTHLY SALES	STANDARD DEVIATION	AVERAGE MONTHLY SALES	STANDARD DEVIATION	AVERAGE MONTHLY SALES	STANDARD DEVIATION	AVERAGE MONTHLY SALES	STANDARD DEVIATION	AVERAGE MONTHLY SALES	STANDARD DEVIATION`
CBL150	$6.38	14	21	-	-	24	75	17	39	3	4	58	81
CBL151	$8.17	24	21	27	50	66	92	38	17	57	67	212	174
CBL152	$12.02	7	15	14	18	5	9	4	4	17	27	47	31
CBL153	$5.88	6	8	9	17	42	56	31	65	10	15	98	101
CBL154	$6.28	158	185	99	60	107	56	124	100	217	145	705	407
CBL155	$4.45	18	45	-	-	7	23	2	4	14	26	41	70
CBL156	$4.44	44	36	12	17	25	37	9	9	41	45	131	60
CBL157	$6.66	140	125	41	26	87	34	133	110	176	125	577	243
CBL158	$6.69	13	19	7	2	83	230	8	5	15	20	126	222
CBL200	$9.61	5	8	5	9	4	5	2	3	6	9	22	21
CBL260	$3.30	2	5	-	-	-	-	8	15	6	12	16	23
CBL261	$2.60	3	10	-	-	-	-	11	25	1	2	26	37
CBL275	$2.15	3	5	2	3	5	6	8	15	8	12	26	28
CBL290	$6.00	182	407	49	17	79	60	170	457	133	115	613	648
CBL291	$7.84	58	44	-	-	13	7	9	12	28	18	108	55
CBL292	$10.00	14	10	4	6	18	35	14	10	10	7	60	43
CBL293	$6.22	22	41	2	3	12	12	18	19	7	12	61	43
CBL294	$91.48	6	8	3	2	6	3	3	3	5	4	23	15
CBL295	$154.92	2	4	-	-	1	1	3	3	3	2	9	6
CBL296	$2.90	36	62	-	-	13	20	5	3	7	4	61	61
CBL300	$2.61	39	79	31	24	73	41	49	69	118	94	310	141
CBL301	$2.61	5	16	-	-	-	-	2	3	16	20	23	16
CBL302	$2.61	8	7	-	-	-	-	-	-	4	9	12	14
CBL303	$2.61	10	19	-	-	3	7	-	-	8	13	21	22
CBL304	$2.61	4	9	-	-	8	7	-	-	3	5	15	13
CBL305	$2.61	3	9	2	4	3	6	10	29	8	14	26	34
CBL306	$2.61	3	3	1	2	10	25	3	6	13	29	30	41
CBL307	$3.91	10	15	-	-	5	9	4	6	9	10	28	16
CBL308	$3.32	12	11	18	44	4	6	17	33	12	16	63	49
CBL500	$125.59	1	2	-	-	-	-	1	2	2	2	4	4
CBL501	$129.95	3	4	-	-	1	1	1	1	1	1	6	4
CBL600	$1.15	8	8	2	2	17	27	6	7	19	33	52	54
CBL601	$0.90	61	41	41	45	73	41	45	60	31	19	251	93
CBL602	$2.39	62	82	15	26	78	104	107	194	72	127	334	316

NOTE: THE STANDARD DEVIATION IN THE TOTAL COLUMN IS BASED ON THE TOTAL AVERAGE MONTHLY DEMAND (I.E. IT IS NOT THE SUM OF THE STANDARD DEVIATION VALUES AT THE INDIVIDUAL WAREHOUSES