Texas Manufacturing has decided to triple the number of distribution centers it operates around North America in order to locate inventories within 500 miles of each major city.What effects should they expect?

Question

Quizplus · Accepted Answer

Tripling the number of distribution centers will require increased safety stock levels in each location due to increased complexity and the need to satisfy more customer demands. However, the proximity of inventories to each major city will decrease the time to fill customer orders, which can have a positive impact on customer satisfaction and potentially increase sales. Although the inventory holding costs may increase for each location, the total operating costs for the distribution centers may not necessarily decrease as the company will need to invest in additional personnel and equipment to manage the expansion.

Texas Manufacturing Has Decided to Triple the Number of Distribution