A centralized inventory system provides a number of stores with cost reduction, information sharing. To build centralized warehouses, two things should be considered: how many warehouses are required and where these are located. The number and location of centralized warehouses can be determined in minimizing total costs and then these cost reductions should be allocated fairly to each store. Since it is too time-intensive to find an optimal solution of minimizing total costs, this paper presents heuristics and compares its results with an optimal solution.