The principal advantage in risk pooling (for example, consolidating multiple distribution centers - DCs- into one or a few mega DCs) is the

		Reduced logistics costs between plant and mega-warehouse
		Overall reduction in uncertainty at the single (or few) mega warehouse from offsetting simultaneous demand increases and declines across multiple markets, resulting in lower safety stock inventory holdings
		Everyone in the supply chain shares risks equally
		None of the above

Narrow control limits like +- 1sigma are not very common. Where would you most likely encounter such limits:

		Food preparation and cooking process in a cafeteria
		Drug manufacturing e.g. Pfizer
		Retail shop e.g. Macys
		Auto manufacturing plant e.g. Ford

A firm stocks a certain item, which is managed on a continuous review basis. Demand averages 230 units per day with a standard deviation of 45 units per day. Lead time is fixed at 10 day.

If the firm sets the reorder point to 2400 units, the cycle-service level will be approximately? (round down Z to 2 decimal places, and consult normal distbn table).

ROP = (Avg. Daily Demand rate * lead time) + safety stock

Safety stock = Z * std.dev. of demand * Sq Root of lead time (consult normal distribution table)

		0.7580
		2482 units
		0.8413
		0.9217