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A distributor wants to see the impact of risk pooling on various inventory management parameters. The distributor currently has 4 warehouses each facing normally distributed independent and identical demand for a product. Each of 4 warehouses currently keeps 301 units of safety stock, which is calculated based on a continuous review policy. What would be the new safety stock value if warehouses consolidated into a single warehouse (assume the same CSL value before and after consolidation)?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92567337

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