DataStream currently uses one central DC to supply the entire northeast region o

Question

DataStream currently uses one central DC to supply the entire northeast
region of the United States. In order to improve customer service,
the company decides to open two more warehouses and distribute the
total NE demand as follows:
(i) 50% to the central DC
(ii) 25% each to the two new DCs
To examine the impact of this strategy on DataStream, derive the
expressions for the following inventory measures:
(a) Total inventory in the supply chain
(b) Total number of orders in the supply chain
(c) Frequency of orders from the DCs

Explanation / Answer

Let s1, s2 and s3 be the quantity to be supplied from the three DCs and d1, d2 and d3 be demand at each of the DCs

(a) total inventory in the supply chain = (s1-d1)+(s2-d2)+(s3-d3)

(b) total number of orders in the supply chain = (d1+d2+d3)/q where q is the average order size .

(c) frequency of orders = q/(d1+d2+d3)*n where n is the number of days in year.

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