Square root law of inventory
Got asked what would happen to inventory when the number of stocking locations change. I thought for a minute and remembered a quick estimate. The Square Root Law states that total safety stock can be approximated by multiplying the total inventory by the square root of the number of future warehouse locations divided by the current number.
X2 = (X1) * √ (n2/n1)
n1 = number of existing facilities
n2 = number of future facilities
X1 = existing inventory
X2 = future inventory
Here are two examples: