An online retailer has six regional distribution centers. Weekly demand in each region is normally distributed, with a mean of 1,000 and a standard deviation of 300. Demand in each region is independent(p=0), and supply lead time is four weeks. The online retailer has an annual holding cost of 20 percent and the cost of each product is $1,000. (20 points)
1) Suppose that it is estimated that total annual safety inventory holding cost of the six regional distribution centers is = $789,600. Calculate the cycle service level(CSL) of the retailer. (10 pt)
2) If the company wants to consolidate the six centers into one centralized distribution center, what would be the annual safety inventory holding cost of the centralized distribution center? Assume the same CSL in (1) (10 pt)