Inputs

Holding cost, H = 0.15 per unit and day

TL costs from plants to DCs = 0.09 per unit
LTL costs from DC to customers = 0.10 per unit
TL costs from plants to central warehouse. = 0.05 per unit
LTL cost from central warehouse to customers = 0.24 per unit
Reorder Interval, T = 6.00 days
Lead Time, L = 5.00 days
Target cycle service level, CSL = 0.95
Correlation Coefficient = 0.00

Demand data by part and region

Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1 Mean, R 35.48 22.61 17.66 11.81 3.36 90.92
Part 1 SD 6.98 6.48 5.26 3.48 4.49 NA
Part 3 Mean 2.48 4.15 6.15 6.16 7.49 26.43
Part 3 SD 3.16 6.20 6.39 6.76 3.56 NA
Part 7 Mean 0.48 0.73 0.80 1.94 2.54 6.49
Part 7 SD 1.98 1.42 2.39 3.76 3.98 NA

Coefficient of variation by part and region

Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1 0.20 0.29 0.30 0.29 1.34 NA
Part 3 1.27 1.49 1.04 1.10 0.48 NA
Part 7 4.13 1.95 2.99 1.94 1.57 NA

Demand during reorder interval and replenishment lead time

Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1 Mean 390.28 248.71 194.26 129.91 36.96 1,000.12
Part 1 SD 23.15 21.49 17.45 11.54 14.89 NA

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Part 3 Mean 27.28 45.65 67.65 67.76 82.39 290.73
Part 3 SD 10.48 20.56 21.19 22.42 11.81 NA
Part 7 Mean 5.28 8.03 8.80 21.34 27.94 71.39
Part 7 SD 6.57 4.71 7.93 12.47 13.20 NA

Outputs
Cycle stock and required safety stock by part and region
Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1Cycle Inventory 106.44 67.83 52.98 35.43 10.08 272.76
Part 1 SS 38.08 35.35 28.70 18.98 24.49 145.60
Part 3 Cycle Inventory 7.44 12.45 18.45 18.48 22.47 79.29
Part 3 SS 17.24 33.82 34.86 36.88 19.42 142.22
Part 7 Cycle Inventory 1.44 2.19 2.40 5.82 7.62 19.47
Part 7 SS 10.80 7.75 13.04 20.51 21.71 73.81

Cycle stock and required safety stock by part and region in days of demand
Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1Cycle Inventory 3.00 3.00 3.00 3.00 3.00 3.00
Part 1 SS 1.07 1.56 1.62 1.61 7.29 1.60
Part 3 Cycle Inventory 3.00 3.00 3.00 3.00 3.00 3.00
Part 3 SS 6.95 8.15 5.67 5.99 2.59 5.38
Part 7 Cycle Inventory 3.00 3.00 3.00 3.00 3.00 3.00
Part 7 SS 22.50 10.61 16.30 10.57 8.55 11.37

Costs per unit by region and part

Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Inventory cost 0.61 0.68 0.69 0.69 1.54 0.69
Transportation cost 0.19 0.19 0.19 0.19 0.19 0.19
Total cost part 1 0.80 0.87 0.88 0.88 1.73 0.88
Inventory cost 1.49 1.67 1.30 1.35 0.84 1.26
Transportation cost 0.19 0.19 0.19 0.19 0.19 0.19

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Total cost part 3 1.68 1.86 1.49 1.54 1.03 1.45
Inventory cost 3.83 2.04 2.89 2.04 1.73 2.16
Transportation cost 0.19 0.19 0.19 0.19 0.19 0.19
Total cost part 7 4.02 2.23 3.08 2.23 1.92 2.35

Total Annual Inventory and Distribution Cost

Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1 (10) 103,729.22 72,171.49 56,964.39 37,982.26 21,259.74 292,107.10
Part 3 (20) 30,463.20 56,425.25 66,904.24 69,161.20 56,259.37 279,213.28
Part 7 (70) 49,246.16 41,625.86 63,050.95 110,335.74 124,746.63 389,005.34
All Parts 183,438.58 170,222.61 186,919.57 217,479.21 202,265.74 960,325.72

CR - 09/23/2022 05:58:43 Page 3 614688371.xlsx - Demand and current system

Inputs
Holding cost, H = 0.15 per unit and day
TL costs from plants to DCs = 0.09 per unit
LTL costs from DC to customers = 0.10 per unit
TL costs from plants to central warehouse. = 0.05 per unit
LTL cost from central warehouse to customers = 0.24 per unit
Reorder Interval, T = 6.00 days
Lead Time, L = 5.00 days
Target cycle service level, CSL = 0.95
Correlation Coefficient = 0.00

Demand data by part and region

Number of parts Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1 Mean 10.00 35.48 22.61 17.66 11.81 3.36 90.92
Part 1 SD 6.98 6.48 5.26 3.48 4.49 NA
Part 3 Mean 20.00 2.48 4.15 6.15 6.16 7.49 26.43
Part 3 SD 3.16 6.20 6.39 6.76 3.56 NA
Part 7 Mean 70.00 0.48 0.73 0.80 1.94 2.54 6.49
Part 7 SD 1.98 1.42 2.39 3.76 3.98 NA

Demand during reorder interval and replenishment lead time

Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1 Mean 390.28 248.71 194.26 129.91 36.96 1,000.12
Part 1 SD 23.15 21.49 17.45 11.54 14.89 NA
Part 3 Mean 27.28 45.65 67.65 67.76 82.39 290.73
Part 3 SD 10.48 20.56 21.19 22.42 11.81 NA
Part 7 Mean 5.28 8.03 8.80 21.34 27.94 71.39
Part 7 SD 6.57 4.71 7.93 12.47 13.20 NA

Outputs
Cycle stock and required safety stock by part and region
Region 1 Region 2 Region 3 Region 4 Region 5 All Regions

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Part 1Cycle Inventory 106.44 67.83 52.98 35.43 10.08 272.76
Part 1 SS 38.08 35.35 28.70 18.98 24.49 145.60
Part 3 Cycle Inventory 7.44 12.45 18.45 18.48 22.47 79.29
Part 3 SS 17.24 33.82 34.86 36.88 19.42 142.22
Part 7 Cycle Inventory 1.44 2.19 2.40 5.82 7.62 19.47
Part 7 SS 10.80 7.75 13.04 20.51 21.71 73.81

Costs per unit by region and part

Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Inventory cost 0.61 0.68 0.69 0.69 1.54 0.69
Transportation cost 0.19 0.19 0.19 0.19 0.19 0.19
Total cost part 1 0.80 0.87 0.88 0.88 1.73 0.88
Inventory cost 1.49 1.67 1.30 1.35 0.84 1.26
Transportation cost 0.19 0.19 0.19 0.19 0.19 0.19
Total cost part 3 1.68 1.86 1.49 1.54 1.03 1.45
Inventory cost 3.83 2.04 2.89 2.04 1.73 2.16
Transportation cost 0.19 0.19 0.19 0.19 0.19 0.19
Total cost part 7 4.02 2.23 3.08 2.23 1.92 2.35

Total Annual Inventory and Distribution Cost

# of parts Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1 10.00 103,729.22 72,171.49 56,964.39 37,982.26 21,259.74 292,107.10
Part 3 20.00 30,463.20 56,425.25 66,904.24 69,161.20 56,259.37 279,213.28
Part 7 70.00 49,246.16 41,625.86 63,050.95 110,335.74 124,746.63 389,005.34
All Parts 183,438.58 170,222.61 186,919.57 217,479.21 202,265.74 960,325.72
Savings:

Cost Savings from Centralization as a function of the correlation coefficient and target cycle service level

All parts Correlation Cofficiant

### 0.00 0.25 0.50 0.75 1.00
0.90 144,599.29 74,212.66 19,154.72 -27,632.51 -69,034.64
0.91 154,468.47 80,830.21 23,228.78 -25,719.87 -69,034.64
ervice Level

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 Target Cycle Service Level
0.92 165,190.00 88,019.29 27,654.69 -23,642.04 -69,034.64
0.93 176,978.90 95,924.06 32,521.22 -21,357.36 -69,034.64
0.94 190,145.25 104,752.45 37,956.37 -18,805.73 -69,034.64
0.95 205,161.54 114,821.28 44,155.18 -15,895.58 -69,034.64
0.96 222,803.75 126,650.86 51,437.99 -12,476.53 -69,034.64
0.97 244,492.60 141,193.82 60,391.28 -8,273.24 -69,034.64
0.98 273,324.15 160,526.15 72,293.11 -2,685.70 -69,034.64
0.99 318,766.25 190,996.29 91,051.88 6,120.95 -69,034.64

Type 1 only Correlation Cofficient

-577,207.49 0.00 0.25 0.50 0.75 1.00
0.90 389.01 -10,750.93 -19,388.45 -26,701.17 -33,158.79
Target Cycle Service Level

0.91 1,938.80 -9,715.76 -18,752.31 -26,402.85 -33,158.79

0.92 3,622.45 -8,591.19 -18,061.22 -26,078.76 -33,158.79
0.93 5,473.71 -7,354.66 -17,301.34 -25,722.41 -33,158.79
0.94 7,541.27 -5,973.66 -16,452.66 -25,324.42 -33,158.79
0.95 9,899.34 -4,398.61 -15,484.75 -24,870.52 -33,158.79
0.96 12,669.77 -2,548.14 -14,347.57 -24,337.24 -33,158.79
0.97 16,075.66 -273.21 -12,949.56 -23,681.64 -33,158.79
0.98 20,603.19 2,750.90 -11,091.15 -22,810.13 -33,158.79
0.99 27,739.15 7,517.28 -8,162.06 -21,436.53 -33,158.79

Type 3 only Correlation Cofficient

-521,394.17 0.00 0.25 0.50 0.75 1.00
0.90 45,491.56 24,073.61 7,383.76 -6,775.70 -19,293.90
Target Cycle Service Level

0.91 48,484.44 26,077.05 8,616.18 -6,197.40 -19,293.90

0.92 51,735.79 28,253.51 9,955.04 -5,569.16 -19,293.90
0.93 55,310.83 30,646.65 11,427.19 -4,878.37 -19,293.90
0.94 59,303.58 33,319.41 13,071.34 -4,106.87 -19,293.90
0.95 63,857.34 36,367.70 14,946.51 -3,226.97 -19,293.90
0.96 69,207.42 39,949.06 17,149.59 -2,193.19 -19,293.90
0.97 75,784.67 44,351.88 19,858.00 -922.30 -19,293.90

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 Target Cycle Se
0.98 84,527.96 50,204.66 23,458.36 767.12 -19,293.90
0.99 98,308.49 59,429.37 29,132.96 3,429.87 -19,293.90

Type 7 only Correlation Cofficient

-561,189.68 0.00 0.25 0.50 0.75 1.00
0.90 98,718.72 60,889.97 31,159.41 5,844.36 -16,581.95

Target Cycle Service Level

0.91 104,045.23 64,468.92 33,364.90 6,880.38 -16,581.95
0.92 109,831.76 68,356.96 35,760.87 8,005.88 -16,581.95
0.93 116,194.36 72,632.07 38,395.37 9,243.42 -16,581.95
0.94 123,300.39 77,406.70 41,337.69 10,625.57 -16,581.95
0.95 131,404.86 82,852.19 44,693.42 12,201.91 -16,581.95
0.96 140,926.56 89,249.94 48,635.97 14,053.90 -16,581.95
0.97 152,632.28 97,115.15 53,482.84 16,330.70 -16,581.95
0.98 168,193.00 107,570.59 59,925.91 19,357.30 -16,581.95
0.99 192,718.61 124,049.65 70,080.97 24,127.61 -16,581.95

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 Central
90.91
12.27
26.43
12.15
6.49
6.45

Central
1,000.01
40.71
290.73
40.30
71.39
21.40

Central

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 447.79
964.24
443.28
236.77
235.38
0.00

Central
2.33
0.29
2.62
3.86
0.29
4.15
5.44
0.29
5.73

Central Savings
869,314.59 ###
800,607.45 ###
950,195.02 ###
2,620,117.05
###

e service level

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Part 1 is decentralized with all others centralized

Inputs
Holding cost = 0.15 per unit and day
TL costs from plants to DCs = 0.09 per unit
LTL costs from DC to customers = 0.10 per unit
TL costs from plants to central whse. = 0.05 per unit
LTL cost from central whse. to cust. = 0.24 per unit
Reorder Interval = 6.00 days
Lead Time = 5.00 days
Target cycle service level = 0.95
Correlation Coefficient = 0.00

Demand data by part and region

# of parts Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1 Mean 10.00 35.48 22.61 17.66 11.81 3.36 90.92
Part 1 SD 6.98 6.48 5.26 3.48 4.49 NA
Part 3 Mean 20.00 2.48 4.15 6.15 6.16 7.49 26.43
Part 3 SD 3.16 6.20 6.39 6.76 3.56 NA
Part 7 Mean 70.00 0.48 0.73 0.80 1.94 2.54 6.49
Part 7 SD 1.98 1.42 2.39 3.76 3.98 NA

Coefficient of variation by part and region

Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1 0.20 0.29 0.30 0.29 1.34 NA
Part 3 1.27 1.49 1.04 1.10 0.48 NA
Part 7 4.13 1.95 2.99 1.94 1.57 NA

Demand during reorder interval and replenishment lead time

Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1 Mean 390.28 248.71 194.26 129.91 36.96
Part 1 SD 23.15 21.49 17.45 11.54 14.89
Part 3 Mean 290.73

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Part 3 SD 40.30
Part 7 Mean 71.39
Part 7 SD 21.40

Outputs
Cycle stock and required safety stock by part and region
Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1Cycle Stock 106.44 67.83 52.98 35.43 10.08
Part 1 SS 38.08 35.35 28.70 18.98 24.49
Part 3 Cycle Stock 79.29
Part 3 SS 66.28
Part 7 Cycle Stock 19.47
Part 7 SS 35.20

Costs per unit by region and part

Region 1 Region 2 Region 3 Region 4 Region 5 Central
Inventory cost 0.61 0.68 0.69 0.69 1.54
Transportation cost 0.19 0.19 0.19 0.19 0.19
Total cost part 1 0.80 0.87 0.88 0.88 1.73
Inventory cost 0.83
Transportation cost 0.29
Total cost part 3 1.12
Inventory cost 1.26
Transportation cost 0.29
Total cost part 7 1.55

Total Annual Inventory and Distribution Cost

# of parts Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1 10.00 103,729.22 72,171.49 56,964.39 37,982.26 21,259.74 0.00 ###
Part 3 20.00 215,355.94
Part 7 70.00 257,600.48
All Parts 103,729.22 72,171.49 56,964.39 37,982.26 21,259.74 472,956.42
Total logistic system: 765,063.52

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 Costs Savings
Benchmark: All parts in the field: 960,325.72 195,262.20
All parts centralized: 2,620,117.05 1,855,053.53

Correlation Cofficient
765,063.52 0.00 0.25 0.50 0.75 1.00
0.90 701,630.61 760,877.31 807,297.72 846,772.24 881,716.74
Target Cycle Service Level
0.91 711,967.60 773,951.29 822,516.18 863,814.29 900,373.12
0.92 723,197.33 788,154.41 839,048.97 882,328.16 920,640.73
0.93 735,545.02 803,771.49 857,227.66 902,685.16 942,926.06
0.94 749,335.46 821,213.32 877,530.40 925,420.73 967,815.28
0.95 765,063.52 841,105.83 900,685.79 951,350.78 996,201.57
0.96 783,541.97 864,476.96 927,890.39 981,815.24 1,029,551.80
0.97 806,258.88 893,208.80 961,334.99 1,019,267.43 1,070,551.68
0.98 836,457.05 931,402.77 1,005,793.75 1,069,053.58 1,125,053.86
0.99 884,053.11 991,601.19 1,075,866.27 1,147,522.73 1,210,956.06

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Part 1 is decentralized with all others centralized except part3 in region 5

Inputs
Holding cost, H = 0.15 per unit and day
TL costs from plants to DCs = 0.09 per unit
LTL costs from DC to customers = 0.10 per unit
TL costs from plants to central whse. = 0.05 per unit
LTL cost from central whse. to cust. = 0.24 per unit
Reorder Interval, T = 6.00 days
Lead Time, L = 5.00 days
Target cycle service level, CSL = 0.95
Correlation Coefficient = 0.00

Demand data by part and region

type of parts Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1 Mean 10.00 35.48 22.61 17.66 11.81 3.36 90.92
Part 1 SD 6.98 6.48 5.26 3.48 4.49 NA
Part 3 Mean 20.00 2.48 4.15 6.15 6.16 7.49 26.43
Part 3 SD 3.16 6.20 6.39 6.76 3.56 NA
Part 7 Mean 70.00 0.48 0.73 0.80 1.94 2.54 6.49
Part 7 SD 1.98 1.42 2.39 3.76 3.98 NA

Coefficient of variation by part and region

Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1 0.20 0.29 0.30 0.29 1.34 NA
Part 3 1.27 1.49 1.04 1.10 0.48 NA
Part 7 4.13 1.95 2.99 1.94 1.57 NA

Demand during reorder interval and replenishment lead time

Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1 Mean 390.28 248.71 194.26 129.91 36.96
Part 1 SD 23.15 21.49 17.45 11.54 14.89
Part 3 Mean 82.39 208.34

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Part 3 SD 11.81 38.53
Part 7 Mean 71.39
Part 7 SD 21.40

Outputs
Cycle stock and required safety stock by part and region
Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1Batch Stock 106.44 67.83 52.98 35.43 10.08
Part 1 SS 38.08 35.35 28.70 18.98 24.49
Part 3 Batch Stock 22.47 56.82
Part 3 SS 19.42 63.38
Part 7 Batch Stock 19.47
Part 7 SS 35.20

Costs per unit by region and part

Region 1 Region 2 Region 3 Region 4 Region 5 Central
Inventory cost 0.61 0.68 0.69 0.69 1.54
Transportation cost 0.19 0.19 0.19 0.19 0.19
Total cost part 1 0.80 0.87 0.88 0.88 1.73
Inventory cost 0.84 0.68
Transportation cost 0.19 0.29
Total cost part 3 1.03 0.97
Inventory cost 1.26
Transportation cost 0.29
Total cost part 7 1.55

Total Annual Inventory and Distribution Cost

type of parts Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1 10.00 103,729.22 72,171.49 56,964.39 37,982.26 21,259.74 0.00
Part 3 20.00 56,259.37 187,565.93
Part 7 70.00 257,600.48
All Parts 103,729.22 72,171.49 56,964.39 37,982.26 77,519.11 445,166.41
Total logistic system: 793,532.89

CR - 09/23/2022 05:58:44 Page 14 614688371.xlsx - PART 1

 Costs Savings
Benchmark: All parts in the field: 960,325.72 166,792.83
All partscentralized: 2,620,117.05 1,826,584.17

Correlation Cofficient
793,532.89 0.00 0.25 0.50 0.75 1.00
0.90 726,106.45 780,127.44 822,962.37 859,584.94 892,105.37

Target Cycle Service Level

0.91 737,094.22 793,610.80 838,424.56 876,738.98 910,761.75
0.92 749,030.94 808,258.64 855,222.13 895,374.51 931,029.36
0.93 762,156.00 824,364.73 873,691.96 915,865.27 953,314.69
0.94 776,814.64 842,352.70 894,319.87 938,750.24 978,203.91
0.95 793,532.89 862,868.08 917,846.11 964,850.67 1,006,590.20
0.96 813,174.68 886,971.01 945,486.41 995,515.32 1,039,940.43
0.97 837,321.77 916,602.50 979,466.64 1,033,213.61 1,080,940.31
0.98 869,421.12 955,992.40 1,024,637.45 1,083,326.91 1,135,442.49
0.99 920,013.67 1,018,075.75 1,095,832.23 1,162,311.68 1,221,344.69

CR - 09/23/2022 05:58:44 Page 15 614688371.xlsx - PART 1

Part 1,3 is decentralized with part 7 centralized

Inputs
Holding cost, H = 0.15 per unit and day
TL costs from plants to DCs = 0.09 per unit
LTL costs from DC to customers = 0.10 per unit
TL costs from plants to central warehouse. = 0.05 per unit
LTL cost from central warehouse to customers = 0.24 per unit
Reorder Interval, T = 6.00 days
Lead Time, L = 5.00 days
Target cycle service level, CSL = 0.95
Correlation Coefficient = 0.00

Demand data by part and region

type of paRegion 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1 Mean 10.00 35.48 22.61 17.66 11.81 3.36 90.92
Part 1 SD 6.98 6.48 5.26 3.48 4.49 NA
Part 3 Mean 20.00 2.48 4.15 6.15 6.16 7.49 26.43
Part 3 SD 3.16 6.20 6.39 6.76 3.56 NA
Part 7 Mean 70.00 0.48 0.73 0.80 1.94 2.54 6.49
Part 7 SD 1.98 1.42 2.39 3.76 3.98 NA

Coefficient of variation by part and region

Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1 0.20 0.29 0.30 0.29 1.34 NA
Part 3 1.27 1.49 1.04 1.10 0.48 NA
Part 7 4.13 1.95 2.99 1.94 1.57 NA

Demand during reorder interval and replenishment lead time

Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1 Mean 390.28 248.71 194.26 129.91 36.96
Part 1 SD 23.15 21.49 17.45 11.54 14.89
Part 3 Mean 27.28 45.65 67.65 67.76 82.39

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Part 3 SD 10.48 20.56 21.19 22.42 11.81
Part 7 Mean 71.39
Part 7 SD 21.40

Outputs
Cycle stock and required safety stock by part and region
Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1Batch Stock 106.44 67.83 52.98 35.43 10.08
Part 1 SS 38.08 35.35 28.70 18.98 24.49
Part 3 Batch Stock 7.44 12.45 18.45 18.48 22.47
Part 3 SS 17.24 33.82 34.86 36.88 19.42
Part 7 Batch Stock 19.47
Part 7 SS 35.20

Costs per unit by region and part

Region 1 Region 2 Region 3 Region 4 Region 5 Central
Inventory cost 0.61 0.68 0.69 0.69 1.54
Transportation cost 0.19 0.19 0.19 0.19 0.19
Total cost part 1 0.80 0.87 0.88 0.88 1.73
Inventory cost 1.49 1.67 1.30 1.35 0.84
Transportation cost 0.19 0.19 0.19 0.19 0.19
Total cost part 3 1.68 1.86 1.49 1.54 1.03
Inventory cost 1.26
Transportation cost 0.29
Total cost part 7 1.55

Total Annual Inventory and Distribution Cost

# of parts Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1 10.00 103,729.22 72,171.49 56,964.39 37,982.26 21,259.74 0.00
Part 3 20.00 30,463.20 56,425.25 66,904.24 69,161.20 56,259.37 0.00 ###
Part 7 70.00 257,600.48
All Parts 134,192.42 128,596.75 123,868.63 107,143.46 77,519.11 257,600.48
Total logistic system: 828,920.86

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 Costs Savings
Benchmark: All parts in the field: 960,325.72 131,404.86
All partscentralized: 2,620,117.05 1,791,196.19

Correlation Cofficient
828,920.86 0.00 0.25 0.50 0.75 1.00
0.90 747,122.18 784,950.92 814,681.49 839,996.53 862,422.84
Target Cycle Service Level
0.91 760,452.04 800,028.34 831,132.36 857,616.89 881,079.22
0.92 774,933.12 816,407.92 849,004.01 876,759.00 901,346.83
0.93 790,855.85 834,418.14 868,654.84 897,806.79 923,632.16
0.94 808,639.04 854,532.73 890,601.74 921,313.87 948,521.38
0.95 828,920.86 877,473.53 915,632.30 948,123.81 976,907.67
0.96 852,749.39 904,426.02 945,039.98 979,622.05 1,010,257.90
0.97 882,043.55 937,560.67 981,192.99 1,018,345.12 1,051,257.78
0.98 920,985.02 981,607.42 1,029,252.11 1,069,820.71 1,105,759.96
0.99 982,361.59 1,051,030.56 1,104,999.23 1,150,952.60 1,191,662.16

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region 5 served from region 4

Inputs
Holding cost, H = 0.15 per unit and day
TL costs from plants to DCs = 0.09 per unit
LTL costs from DC to customers = 0.10 per unit
TL costs from plants to central whse. = 0.05 per unit
LTL cost from central whse. to cust. = 0.24 per unit
Reorder Interval, T = 6.00 days
Lead Time, L = 5.00 days
Target cycle service level, CSL = 0.95
Correlation Coefficient = 0.00

Demand data by part and region

# of parts Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1 Mean 10.00 35.48 22.61 17.66 11.81 3.36 90.92
Part 1 SD 6.98 6.48 5.26 3.48 4.49 NA
Part 3 Mean 20.00 2.48 4.15 6.15 6.16 7.49 26.43
Part 3 SD 3.16 6.20 6.39 6.76 3.56 NA
Part 7 Mean 70.00 0.48 0.73 0.80 1.94 2.54 6.49
Part 7 SD 1.98 1.42 2.39 3.76 3.98 NA

Coefficient of variation by part and region

Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1 0.20 0.29 0.30 0.29 1.34 NA
Part 3 1.27 1.49 1.04 1.10 0.48 NA
Part 7 4.13 1.95 2.99 1.94 1.57 NA

Demand during reorder interval and replenishment lead time

Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1 Mean 390.28 248.71 194.26 166.87 ###
Part 1 SD 23.15 21.49 17.45 18.84
Part 3 Mean 290.73

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Part 3 SD 40.30
Part 7 Mean 71.39
Part 7 SD 21.40

Outputs
Cycle stock and required safety stock by part and region
Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1Batch Stock 106.44 67.83 52.98 35.43
Part 1 SS 38.08 35.35 28.70 30.99
Part 3 Batch Stock 79.29
Part 3 SS 66.28
Part 7 Batch Stock 19.47
Part 7 SS 35.20

Costs per unit by region and part

Region 1 Region 2 Region 3 Region 4 Region 5 Central
Inventory cost 0.61 0.68 0.69 0.84
Transportation cost 0.19 0.19 0.19 0.22
Total cost part 1 0.80 0.87 0.88 1.06
Inventory cost 0.83
Transportation cost 0.29
Total cost part 3 1.12
Inventory cost 1.26
Transportation cost 0.29
Total cost part 7 1.55

Total Annual Inventory and Distribution Cost

# of parts Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1 10.00 103,729.22 72,171.49 56,964.39 45,892.05 0.00
Part 3 20.00 215,355.94
Part 7 70.00 257,600.48
All Parts 103,729.22 72,171.49 56,964.39 45,892.05 0.00 472,956.42

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 Total logistic system: 751,713.56

Costs Savings
Benchmark: All parts in the field: 960,325.72 208,612.15
All partscentralized: 2,620,117.05 1,868,403.49

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Inputs
Holding cost = 0.15 per unit and day
TL costs from plants to DCs = 0.09 per unit
LTL costs from DC to customers = 0.10 per unit
TL costs from plants to central whse. = 0.05 per unit
LTL cost from central whse. to cust. = 0.24 per unit
Reorder Interval = 6.00 days
Lead Time = 5.00 days
Target cycle service level = 0.95
Correlation Coefficient = 0.00

Demand data by part and region

# of parts Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1 Mean 10.00 35.48 22.61 17.66 11.81 3.36 90.92
Part 1 SD 6.98 6.48 5.26 3.48 4.49 NA
Part 3 Mean 20.00 2.48 4.15 6.15 6.16 7.49 26.43
Part 3 SD 3.16 6.20 6.39 6.76 3.56 NA
Part 7 Mean 70.00 0.48 0.73 0.80 1.94 2.54 6.49
Part 7 SD 1.98 1.42 2.39 3.76 3.98 NA

Coefficient of variation by part and region

Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1 0.20 0.29 0.30 0.29 1.34 NA
Part 3 1.27 1.49 1.04 1.10 0.48 NA
Part 7 4.13 1.95 2.99 1.94 1.57 NA

Demand during reorder interval and replenishment lead time

Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1 Mean 427.24 248.71 194.26 129.91
Part 1 SD 27.53 21.49 17.45 11.54
Part 3 Mean 27.28 45.65 67.65 67.76 82.39

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Part 3 SD 40.30
Part 7 Mean 71.39
Part 7 SD 21.40

Outputs
Cycle stock and required safety stock by part and region
Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1Batch Stock 106.44 67.83 52.98 35.43
Part 1 SS 45.28 35.35 28.70 18.98
Part 3 Batch Stock 7.44 12.45 18.45 18.48 22.47
Part 3 SS 66.28
Part 7 Batch Stock 19.47
Part 7 SS 35.20

Costs per unit by region and part

Region 1 Region 2 Region 3 Region 4 Region 5 Central
Inventory cost 0.64 0.68 0.69 0.69
Transportation cost 0.19 0.19 0.19 0.19
Total cost part 1 0.83 0.87 0.88 0.88
Inventory cost 0.45 0.45 0.45 0.45 0.45 0.38
Transportation cost 0.19 0.19 0.19 0.19 0.19 0.29
Total cost part 3 0.64 0.64 0.64 0.64 0.64 0.67
Inventory cost 1.26
Transportation cost 0.29
Total cost part 7 1.55

Total Annual Inventory and Distribution Cost

# of parts Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1 10.00 107,670.10 72,171.49 56,964.39 37,982.26
Part 3 20.00 11,586.56 19,388.80 28,732.80 28,779.52 34,993.28 81,467.60
Part 7 70.00 257,600.48
All Parts 119,256.66 91,560.29 85,697.19 66,761.78 34,993.28 339,068.08
Total logistic system: 737,337.28

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 Costs Savings
Benchmark: All parts in the field: 960,325.72 222,988.44
All partscentralized: 2,620,117.05 1,882,779.77

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Summary of investment and annual cost for various options

Option Investment Annual Cost Savings from BRate of return

Decentralize all parts in five warehousBase Case $ 960,326
Centralize all parts at NDC $ 850,000 $ 2,620,117 $ (1,659,791) -195.3%
Centralize parts 3, 7, decentralize part $ 650,000 $ 765,064 $ 195,262 30.0%
Centralize part 7, decentralize part3 1, $ 300,000 $ 828,921 $ 131,405 43.8%
serve region 5 part 1 from region 4 $ 600,000 $ 751,714 $ 208,612 34.8%
NPV(10%)

$(19,107,705)
$ 1,497,884
$ 1,145,453
$ 1,694,734