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The Square Root Law of Inventory is also a form of risk pooling, especially in terms of the amount of "safety stock" you have to warehouse. [See Making Sense of the Square Root Law of Inventory Management
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Inventory management's square root law gives you an estimate of how the number of warehouse locations affects the size of your inventory. From leanmath.com, the Centralisation of Inventories and the "Square Root Law
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Variance and standard deviation in 40 seconds Again, the square root law of inventory says that if you are starting out with inventory at one location and want to disperse that inventory to other locations,