The square root rule suggests that all things being equal (e., same demand, same variation, .

business comptition
October 18, 2020
Explain what JEPD and doublets mean in relation to this textual history.
October 18, 2020

The square root rule suggests that all things being equal (e., same demand, same variation, .

The square root rule suggests that all things being equal (e.g., same demand, same variation, …), the firm’s aggregate safety stock by changing from one- into two-warehouse system will increase by 1.41   Conversely, by setting up one central warehouse (which you can think of it as setting up a distribution center) will help save inventory as demonstrated when we discussed the topic of distribution centers.  We called it “risk pooling,” a form of postponement at that time. Another type of “postponement” is to delay differentiation point. For example, when producing cars, colors are painted at a very late stage in the production line; and regardless of color of the vehicles, they all share the same parts (parts commonality) so long as cars of two different colors belong to the same model-year. Use the square root rule to illustrate the effect of parts commonality between two products (e.g., cars) on the averaged inventory vs. when no part commonality is used

 

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