. What will be the average inventory level at Davids warehouse at Torrance?

A) 61-80 pairs B) 81-100 pairs C) 101-120 pairs D) 121-140 pairs

David is evaluating the inventory levels with centralized warehouses. He plans to close the warehouse at Los Angeles and used the warehouse at Torrance to deal with the demand at Torrance and Los Angeles. In addition, David plans to close the warehouse at Riverside and used the warehouse at Irvine to handle the demand at Riverside and Irvine. In addition, David found that the correlation of demand between Torrance and Los Angeles is -0.70 and the correlation between Irvine and Riverside is +0.12. Based on risk pooling theory, which centralized warehouse will show a larger percentage of reduction in inventory level compared with the total inventory levels before centralization?

A) Warehouse at Torrance B) Warehouse at Irvine C) Both warehouses have the same reduction in inventories. D) No inventory reduction will happen in either warehouse

What will be the percentage of inventory reduction at Davids warehouse at Irvine after centralization?

A) 2% B) 12% C) 22% D) 32%

David is a shoemaker and owns 4 warehouses located at Torrance, Los Angeles, Irvine, and Riverside. In order to reduce inventories, David is considering whether he should close some warehouses to save costs. The order cost is $60 per order, and the inventory holding cost is $0.27 per unit per week. You promise customers that order lead time is one week and customer service level is 95%. First, he collected the information about the demand in the nast 12 weeks at these four locations. David is using Q-system to maintain the inventory levels at four warehouses