When designing a warehouse network,if the overall safety stock increases as the number of warehouses increase then:
A)Network uncertainty is decreasing
B)Network uncertainty is increasing
C)Network uncertainty in constant
D)Safety stock is appropriately linked to average stock

Question

Quizplus · Accepted Answer

When overall safety stock increases as the number of warehouses increase, network uncertainty is increasing. This is because safety stock is designed to mitigate the uncertainty of demand and lead times. As more warehouses are added, there are more nodes in the network and more chances for variability to occur. Therefore, safety stock needs to increase to compensate for this increased uncertainty.

When Designing a Warehouse Network,if the Overall Safety Stock Increases