Effect of warehouse centralization on lead times

Inventory pooling which refers to the consolidation of multiple inventory locations into a single location is generally believed to be beneficial as the centralized location faces less demand variability than the individual locations. However, the main downside of centralizing inventory in a central location is given as the increase in lead times and transportation costs. Using case studies and a real example, this paper will analyze the effect of warehouse and DC centralization on lead time and partially costs.