datastream currently uses one central dc to supply the entir

datastream currently uses one central dc to supply the entire northeast region of us.n 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 exmine the impact of this strategy on datastream derive the expressions for the following inventory measures:

a)total inventory in supply chain

b)total number of orders in supply chain

c)frequency of orders from the DCs

Solution

Below are the expressions for the following inventory measures -

a) Total inventory in supply chain = I_CDC+I_DC1+I_DC2+Intransit inventory

I_CDC is the total inventory in Central DC including safety stock, I_DC1 andI_DC2 are inventories in new DCs.

b) Total number of orders in supply chain(N) = D/Q where D is annual demand, Q is Economic order quantity.

c) Frequency of orders from the DCs = 365/N where N is the number of orders.