Exam CLTD topic 1 question 111 discussion

C is correct If a business chooses a greater number, it faces higher inventory costs (because safety stock levels will increase), higher inbound transport costs (because of the number of destinations), and higher operating costs (facility operation and information management to control a more complex system). However, the customer service level will be higher, since there will be more warehouses nearer the customer (thus faster reaction time) and greater likelihood of being able to satisfy required customer demand within an acceptable time. Fewer warehouses means lower costs in general but also less competitiveness in terms of the ability to provide service quickly and with minimum risk. Businesses must consider their customers, their business models, and their costs in making this decision.

Correct answer C Higher inventory costs(safety stocks increase) and higher inbound transportation costs(because of the number of destinations) APICS Number of Warehouses