Which of the following statements does not describe the benefits of utilizing distribution centers over direct store delivery?
A) More accurate sales forecasts are possible when retailers combine forecasts for many stores serviced by one distribution center rather than doing a forecast for each store.
B) Distribution centers enable the retailer to carry less merchandise in the individual stores.
C) The use of distribution centers increases inventory investment.
D) It is easier to avoid running out of stock or having too much stock in any particular store because merchandise is ordered from the distribution center as needed.
E) The effects of forecast error for the individual stores are minimized and less backup inventory is needed to prevent stockouts.

Question

Quizplus · Accepted Answer

Using DCs results in overall lower inventory levels because the amount of backup stock needed in a centralized DC is less than the amount of backup stock needed in all the stores served by the center.

Which of the Following Statements Does Not Describe the Benefits