If a company decides to change the number of inventory locations as a part of their strategy, they can find out the inventory volume needed to be stored in new facilities. X1 = total inventory in existing facilities If a company distributes 40,000 units using 8 existing facilities and plans to reduce the number of facilities to 2, then what should be the inventory in two of their future facilities? If we use the square root formula, the answer is 20,000(= 40000 x (2/8)) The square root law states that the total safety stock inventories in a future number of facilities can be approximated by multiplying the total amount of inventory at existing facilities by the square root of the number of future facilities divided by the number of existing facilities. ![]() #SQUARE ROOT LAW OF INVENTORY MANAGEMENT PROFESSIONAL#.#SQUARE ROOT LAW OF INVENTORY MANAGEMENT UPDATE#.
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