Managing Supply Chain and Operations 1st Edition by Thomas Foster ,Scott Sampson,Cynthia Wallin,Scott Webb

Exercise 31

Currently, a company has 50,000 units of safety stock for a product located in three warehouses. The company is contemplating expanding to nine warehouses. The company believes that this increased safety stock inventor)' investment with the new locations will result in an additional $600,000 in revenue due to improved customer service. Assuming that each unit in safety stock inventory costs $5, is the expansion to nine warehouses a potentially good idea?