Use the following information for the next 3 problems: ABC Company plans to construct a 60,000 sq. ft private warehouse and rent public warehouse as needed. Warehouse inventory turns at the rate of 2 times per month. One pound of merchandise occupies 0.2 cubic feet of warehouse space and can be stacked 10 feet high. Given aisles, and normal operating efficiency, only 50 percent of the total warehouse space is actually used for storage. Assume the facility is being built to size so no additional space is allowed for future product growth. A private warehouse can be constructed for $36 per sq. ft. and can be amortized over 20 years. Annual fixed costs amount to $20 per sq. ft. of total space. The cost of operation is $0.03 per pound of throughput. Space may also be rented for a storage charge on inventory of $0.06 per pound per month and a handling charge of $0.05 per pound of throughput. Monthly demands for a typical year are as follows: Month Demand (lb) Jan 2,000,000 Feb 5,000,000 Mar 3,000,000 Apr 2,000,000 May 1,000,000 Jun 250,000 Jul 1,250,000 Aug 2,250,000 Sept 3,000,000 Oct 3,500,000 Nov 4,000,000 Dec 4,500,000 1. How much storage space is needed for January? - 100,000 square feet - 80,000 square feet - 60,000 square feet - 120,000 square feet - 20,000 square feet - 40,000 square feet 2. For the company’s 60,000 square foot warehouse, what is the monthly fixed cost? - $280,000 - $9,000 - $202,000 - $60,000 - $156,000 - $109,000 3. Assume 60% of February orders are processed from the company’s private facility. What is the February private variable cost? - $110,000 - $90,000 - $120,000 - $80,000 - $100,000 - $130,000

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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Question

Use the following information for the next 3 problems:

ABC Company plans to construct a 60,000 sq. ft private warehouse and rent public warehouse as needed. Warehouse inventory turns at the rate of 2 times per month. One pound of merchandise occupies 0.2 cubic feet of warehouse space and can be stacked 10 feet high. Given aisles, and normal operating efficiency, only 50 percent of the total warehouse space is actually used for storage. Assume the facility is being built to size so no additional space is allowed for future product growth.

A private warehouse can be constructed for $36 per sq. ft. and can be amortized over 20 years. Annual fixed costs amount to $20 per sq. ft. of total space. The cost of operation is $0.03 per pound of throughput.

Space may also be rented for a storage charge on inventory of $0.06 per pound per month and a handling charge of $0.05 per pound of throughput. Monthly demands for a typical year are as follows:

Month	Demand (lb)
Jan	2,000,000
Feb	5,000,000
Mar	3,000,000
Apr	2,000,000
May	1,000,000
Jun	250,000
Jul	1,250,000
Aug	2,250,000
Sept	3,000,000
Oct	3,500,000
Nov	4,000,000
Dec	4,500,000