Debunking a VGC myth: PS3 needs more stock because it ships to more countries

[ils411]

Some things to consider
1. Distribution Centers - Sony has a chain of distribution centers to cater to different regions. Each distribution center needs to be able to cater to the supply requirements of all the stores it caters to
2. Distance of store from distribution center - the further the distribution center, the higher days of inventory is usually desired to minimize logistics cost
3. Number of stores catered to by Distribution Center - The more stores a distribution center caters to, the higher its required inventory level so as to be able to react to any spike in demand if any
4. Cost of shipment to distribution center- similar to distance of store to distribution center. But this also include customs/temporary storage fees etc. Higher cost of shipment would mean less frequent shipment but larger volume of shipment.
5. Demand - higher demand would mean that a larger inventory level will be retained to counter sudden spikes in demand. but this will also have to be correlated with distance and delivery cost and holding cost etc. if the distribution center is near by, a store that has large demand for an item can afford to retain a lower inventory level. But if its farther, more inventory is desired. Similarly, A store with small demand for an item can also opt to have a larger inventory level as oppose to its sales to save on delivery cost depending on which is higher, delivery cost or holding cost.

there are so many factors to consider as to why an item or product can have more inventory in stores and in warehouse and in distribution centers that is being sold in more regions as oppose to an item sold in less regions.