Assignment:
Gap has started selling through its online channel along with its retail stores. Management has to decide which products to carry at the retail stores and which products to carry at a central warehouse to be sold only via the online channel. Gap currently has 900 retail stores in the US. Weekly demand for size large khaki pants at each store is normally distributed with mean 800 and standard deviation of 100. Each pant costs $30. Gap has a holding cost of 25%. Gap manages all inventories using a continuous review policy, and the supply lead time for Khaki is 4 weeks. The target cycle service level is 95%. How much reduction in holding cost per unit sold can Gap expect if moving Khaki pants from store to the online channel?
Your answer must be typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.