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Big Old Tires Currently Owns and Operates Four Warehouses in the Chicago

Question 7

Multiple Choice

Big Old Tires currently owns and operates four warehouses in the Chicago area. Assume that each warehouse serves a geographic region. Weekly demands in any region are normally distributed with a mean of 200 tires and a standard deviation of 100 tires. Orders from suppliers take 4 weeks to be delivered. Big Old Tires is contemplating a consolidation of warehouses from four to one. Upon consolidation, the wholesaler carries the same safety stock in one warehouse as previously in four warehouses combined. The service level (in terms of probability of not stocking out in a cycle) s/he can provide from this single warehouse will be [Give 1-line explanation]:


A) Higher than before.
B) Same as before.
C) Lower than before.

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