Assume aggregating the inventory in a single warehouse increases the by $45,000. If a CSL of 95% is desired and the correlation coefficient is estimated to be 0.5 (all other parameters unchanged), is it a feasible choice to aggregate the demand? What if the correlation coefficient is estimated to be 0.2? What is the conclusion?

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter4: Equations Of Linear Functions
Section4.5: Correlation And Causation
Problem 2AGP
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Assume aggregating the inventory in a single warehouse increases the transportation cost
by $45,000. If a CSL of 95% is desired and the correlation coefficient is estimated to be
0.5 (all other parameters unchanged), is it a feasible choice to aggregate the demand?
What if the correlation coefficient is estimated to be 0.2? What is the conclusion?
Transcribed Image Text:Assume aggregating the inventory in a single warehouse increases the transportation cost by $45,000. If a CSL of 95% is desired and the correlation coefficient is estimated to be 0.5 (all other parameters unchanged), is it a feasible choice to aggregate the demand? What if the correlation coefficient is estimated to be 0.2? What is the conclusion?
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