Questions
1. What is the annual inventory and distribution cost of the current distribution system?
2. What are the savings that would result from following the task force recommendation and setting up an NDC? Evaluate the savings as the correlation coefficient of demand in any pair of regions varies from 0 to 0.5 to 1.0. Do you recommend setting up an NDC?
3. Suggest other options that Gary Fisher should consider. Evaluate each option and recommend a distribution system for ALKO that would be most profitable. How dependent is your recommendation on the correlation coefficient of demand across different regions?