Which of the following is an advantage of using a distribution center?

• A. Retailers are less likely to over- or understock merchandise
• B. Retailers can forecast sales for each store individually
• C. Retailers must increase overall inventory investments
• D. Retailers experience higher distribution costs

Answer: (A)

Centralizing storage in a distribution center lets a retailer pool inventory for many stores and allocate replenishments based on overall demand. This broader view helps balance supply and demand across the network, so stores are less likely to experience stockouts or overstock. In short, the distribution center improves stock availability and reduces mismatches across locations. Forecasting for each store relies more on data and analytics than on the distribution-center structure itself, and higher distribution costs or a need for more total inventory are drawbacks rather than advantages.