Which of the following outcomes is most likely to occur if safety stock is moved from multiple warehouses to a centralized warehouse?
Which of the following outcomes is most likely to occur if safety stock is moved from multiple warehouses to a centralized warehouse?
Centralizing safety stock in a single warehouse rather than multiple warehouses typically leads to a decrease in the aggregate cost of safety stock. This is because centralization allows for pooling of inventory, reducing the overall amount of safety stock needed to achieve the same service level. Stock can be managed more efficiently, and the risk of stockouts is spread over a larger inventory base.
cost of transportation will decrease