CBP WP 58-21
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The Square Root Law for Warehouses
[CBP WP 58-21]
This paper presents the well-known square root model for estimating the impact of adding or removing warehouses from a market. For example, doubling the number of warehouses should increase the total system inventory by about 41%. The paper provides justification for this model for both safety stock and lotsize inventories and presents simple tables that can be used instead of equations.
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