Mickey has two identical stores with the same holding costs, setup costs, and demand for his products. He decides to combine them into one store which will combine the demand of the two individual stores while keeping the other characteristics of the store constant. As a result...

Mickey has two identical stores with the same holding costs, setup costs, and demand for his products. He decides to combine them into one store which will combine the demand of the two individual stores while keeping the other characteristics of the store constant. As a result...

He will see an overall increase in costs due to the load on the system.

He has developed a long chain between his two stores, ensuring flexibility in his process flow.

As a first order approximation, he will only need to stock about $70\%$ of the inventory he needed for the other two stores.

He will have to order twice as much inventory for the new store to account for its doubled demand.