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What is the percent reduction in safety stock if we consolidate two of the warehouses into one? Which two warehouses should be consolidated? (Assuming independence)
What is the percent reduction in safety stock if we consolidate two of the warehouses into one? Which two warehouses should be consolidated? (Assuming independence)
Lucas Industries is a company that specializes in sourcing and distributing OEM parts for electronics repair. The bulk of its business comes from replacement LCD screens for 3rd party cell phone repairs. Lucas Industries currently has a total of 3 warehouses. Below is information that summarizes each warehouse: Warehouse Avg SD* Warehouse 1 4,314 146 Warehouse 2 1,293 261 Warehouse 3 1,415 166 *Note SD represents Std Deviation of Demand during Lead time Location (X,Y) (182,281) (496,262) (42,193) Management is interested in understanding how inventory levels will change depending on the number of warehouses. They would like to maintain a service level of 90% and have asked you to provide information for the following scenarios. 1. What is the percent reduction in safety stock if we consolidate two of the warehouses into one? Which two warehouses should be consolidated? (Assuming independence) Lucas Industries is a company that specializes in sourcing and distributing OEM parts for electronics repair. The bulk of its business comes from replacement LCD screens for 3rd party cell phone repairs. Lucas Industries currently has a total of 3 warehouses. Below is information that summarizes each warehouse: Warehouse Avg SD* Warehouse 1 4,314 146 Warehouse 2 1,293 261 Warehouse 3 1,415 166 *Note SD represents Std Deviation of Demand during Lead time Location (X,Y) (182,281) (496,262) (42,193) Management is interested in understanding how inventory levels will change depending on the number of warehouses. They would like to maintain a service level of 90% and have asked you to provide information for the following scenarios. 1. What is the percent reduction in safety stock if we consolidate two of the warehouses into one? Which two warehouses should be consolidated? (Assuming independence)Step by Step Solution
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