Public Policy Pertaining to Criminal Justice
October 18, 2020
 Guided Response: Select two of your classmates’ discussions and offer your agreement or counter perspectives on these recommendations. Do you agree with their perspectives on a direct service, or
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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