Supply Chain News Bites - Only from SCDigest
 

-July 17, 2009

 
 

This Week's Supply Chain Trivia: Impact of Number of DCs on Inventory Levels

 
 

How Many Distribution Centers does it Take to Double Network Inventory Levels?

 
  By SCDigest Editorial Staff  
     
 

This week's supply chain trivia question:  With all other things being equal (and they never are), but nonetheless, in a single-tier distribution network, how many distribution centers does it take for the total inventory level in the network to double, versus having just a single DC, according to classic inventory management theory?

ANSWER:

4 - the formula, actually, is Inventory in All DCs = Inventory in One DC, divided by the square root of the number of DCs in the tier. At 4, inventory is doubled over that held in a single DC. At 9, it triples.

 
 
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