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A. Management has decided to establish three Distribution Centers (DCs) in different regions of the country to save on transportation costs. For one of the products, the average weekly demand at each DC will be 80 units. The product is valued at $550 per unit. Average shipment sizes into each DC will be 900 units per trip. The average lead time will be three weeks. Each DC will carry two weeks of supply as safety stock. Anticipation inventory should be negligible.
1. How many dollars of cycle inventory will be held at each DC, on the average?
2. How many dollars of safety stock will be held at each DC?
3. How many dollars of pipeline inventory will be in transit for each DC, on average?
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