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Question: Business Scenario 1 A consumer goods company is considering changing its distribution strategy. Instead of direct delivery from its central factory/warehouse in Boston to its customers, the company will deploy 2 more distribution centres (DC), one in San Jose, and one in St. Louis. Inventory will be transported to the DCs in bulk. Retail customers in the west coast and mid-West will be serviced from these 2 DCs by direct delivery respectively. Business Scenario 2 A consumer product company is considering changing its distribution strategy. Instead of direct delivery from its central factory/warehouse in New York to its customers, the company will outsource its entire distribution operation to a 3PL which has warehouses nation-wide, instead of investing in setting up DCs in other parts of the country.
Inventory will be deployed at the various 3PL warehouses. Retail customers will be serviced by the 3PL from their local warehouses by direct delivery. Answer the following multiple choice question by comparing Business Scenario 1 (Option A) and Business Scenario 2 (Option B) - Assuming Management mandates there should be no increase in total inventory level
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