Why the Square Root Law of Inventory Still Matters
If you've ever wondered why opening a second warehouse doesn't actually require doubling your stock, you're likely looking for the square root law of inventory. It's one of those rare mathematical concepts that actually makes sense in the messy, real world of logistics. Essentially, it tells us that as you increase the number of locations where you store products, your total safety stock needs to grow—but it doesn't grow at a 1:1 ratio. Instead, it grows at the rate of the square root of the number of locations. ...