Question: A company has two stores located in different regions. Each store holds an inventory of 80 units. Demand in each region can be either high

A company has two stores located in different regions. Each store holds an inventory of 80 units. Demand in each region can be either high or low and is independent with other regions: Probability that demand is 90 = 60% Probability that demand is 50 = 40%

a. Suppose each store only serves its local market. How much sales volume does the company expect to make across the two regions?

b. Suppose the two stores are close to each other and the company uses transshipment practice between them. How much sales volume does the company expect to make across the two regions now?

c. What is the value of the transshipment practice for the company, measured by the increase in sales volume?

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a Each store only serves its local market In this case each stores sales volume will be limited by its own inventory Lets calculate the expected sales ... View full answer

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