Final answer:
Amazon's distribution system minimizes storeroom inventory through the use of large automated warehouses and economies of scale, which contrasts with traditional retail locations that incur higher costs due to on-site inventory and rent.
Step-by-step explanation:
The distribution system designed to reduce store room inventory is exemplified by the business model used by Amazon. Amazon utilizes large warehouses located in low-rent areas, heavily leveraging economies of scale. These facilities are highly automated with computer systems and robots, enabling efficient inventory management with lower average costs per sale compared to traditional bookstores that keep inventory on site, incurring high rent costs for retail locations.
Another relevant concept in distribution systems is the difference between bulk reducing and bulk gaining industries. A bulk reducing industry, like many types of manufacturing, finds it beneficial to locate near raw material sources, as the raw materials often weigh more and cost more to transport than the finished goods. This reduces the raw materials stored and the overall costs for shipping after production.