Supply chain management: ccording to Chapter 5 of the book Guide to deliver, there are three costs components associated
with network trade-off between number of facilities and costs. What cost component does the fixed
cost correspond to? Explain why this cost increases as the number of warehouse increases.

Question

ccording to Chapter 5 of the book Guide to deliver, there are three costs components associated
with network trade-off between number of facilities and costs. What cost component does the fixed
cost correspond to? Explain why this cost increases as the number of warehouse increases.

liv da · Accepted Answer

Fixed cost corresponds to facility costs.
As the number of warehouse increases, facility related costs such as utilities (electricity, water),
laborers/workers, rent, insurance also increase.

Supply chain management

Ccording to Chapter 5 of the book Guide to deliver, there are three costs components associated with network trade-off between number of facilities and costs. What cost component does the fixed cost correspond to? Explain why this cost increases as the number of warehouse increases.

Fixed cost corresponds to facility costs. As the number of warehouse increases, facility related costs such as utilities (electricity, water), laborers/workers, rent, insurance also increase.

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