=+Annual holding cost per unit:

Calculating Savings Due to Pooling Safety Stock Lead time (fixed):

z value (for desired service level):

Average daily demand Variance of daily demand A B C D E F G 1

2 3

4 5

6 7

9 10 11 12 13 14 15 16 17 18 19 20 21 22 8

days Location 1 Location 2 Location 3 Reorder point during lead time 400.00 320.00 240.00 Safety stock 13.98 16.41 14.74 Total units:

Total annual holding cost:

Total annual holding cost:

45.13

$225.63 Average daily demand 120 Variance of daily demand 15.7 Average demand Average demand Reorder point Pooled SS 986.11 during lead time 960.00 Safety stock 26.11

$130.56 Savings due to pooling safety stock: $95.07