Aggregated inventory: Example

Inventory

Management

$34$

$$ Demand information $($per week$)$

$$ Region$1$: Normal with mean $250,$ std dev. $90$

$$ Region $2$: Normal with mean $180,$ std dev. $70$

$$ Configuration $1$: Warehouses at location A and B

$$ When available, use inventory to satisfy customer orders

$$ Service level target of $97\%$

$$ Lead time factory$-$to$-$location is $1$ week, H $=$ $$0\mathrm{.}27$ per unit per week

$$ Configuration $2$: Warehouse location C $($Aggregate demand of A &B$)$

$$ All other costs and