Supply Chain Management, Risk pooling game Report

Risk pooling is an important concept in supply chain management. Risk pooling

suggests that if we can aggregates demand across locations, demand variability
will reduce. Because we aggregate demand across different locations, it becomes
a result more likely that high demand from one customer will be offset by low
demand customer. This reduction in variability allows a decrease in safety
stock and therefore reduces average inventory.
No Values Changed

Extreme Positive Values

Extreme Negative Values

Centralized Value

Holding Cost increased

Less Carrying Cost

Increased Z Value

Reduced Z Value