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In case demand in different geographical regions is about the same size and independent,aggregation increases safety inventory by the square root of the number of areas aggregated.
Discounting
A financial process used to determine the present value of future cash flows by applying a discount rate, which accounts for the time value of money.
Present Value
The present valuation of a series of future cash inflows or a one-time sum, based on a specified rate of return.
Interest Rate
The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan balance.
Present Value
The current worth of a future sum of money or stream of cash flows given a specified rate of return, considering the time value of money.
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