Exam CSCP topic 1 question 535 discussion

D.While adding warehouses initially increases costs, as the new warehouses become fully operational and distribution processes stabilize, there may be opportunities for optimization and efficiency improvements, leading to a decrease in network costs over time. However, the immediate effect of adding warehouses is typically an increase in costs. Therefore, the statement "increase initially and then decrease" best reflects this scenario.

B. increase. If a company adds warehouses to fulfill increasing market demand, the network costs most likely will increase. This is because adding warehouses to the supply chain can lead to additional costs, such as increased rent or mortgage expenses, higher labor costs, and potentially increased transportation costs as products are distributed among a larger number of locations. While having more warehouses may improve responsiveness and reduce delivery times, it typically increases the overall network costs associated with operating the expanded supply chain infrastructure.