We divided the US into $10$ regions and have been selling directly to the customer. These direct sales have really increased demand. All product inventories are maintained locally in each territory and replenished from Oshkosh every five weeks using UPS.

The average replenishment lead time using UPS is one week. UPS charges at a rate of $$0\mathrm{.}75+0\mathrm{.}33x$ where $x$ is the quantity shipped in pounds.

Onion Cola products weigh $0\mathrm{.}2$ pounds and cost $$350$ each. Garlic Soda products weigh $0\mathrm{.}10$ pounds and cost $$35$ each.

Weekly demand for Onion Cola products in each territory is normally distributed, with a mean of $mH=3$ and a standard deviation of $sH=6.$ Weekly demand for Garlic Soda products in each territory is normally distributed, with a mean of $mL=25$ and a standard deviation of $SL=6.$

Outrageous Soda maintains sufficient safety inventories in each territory to provide a CSL of $0\mathrm{.}975$ for each product. Annual holding cost at Outrageous Soda is $30$ percent.

In addition to the current approach, we're considering two other options:

Option A: Keep the current structure but replenish inventory once a week rather than once every five weeks.

Option B: Eliminate inventories in the territories, aggregate alinventories in a finished goods warehouse at Oshkosh, and replenish the warehouse once a week.

If inventories are aggregated at Oshkosh, orders will be shipped using FedEx, which charges $$7\mathrm{.}25+0\mathrm{.}77x$ per shipment, where $x$ is the quantity shipped in pounds. The factory requires a one$-$week lead time to replenish finished$-$goods inventories at the Oshkosh warehouse. An average customer order is for $1$ unit of Onion Cola and $10$ units of Garlic Soda.

Can your team help us evaluate these options?