In order to be able to fulfill increasing market demand, a company is considering adding warehouses rather than increasing the capacity of existing warehouses. If the warehouses are added, the network costs most likely will:
In order to be able to fulfill increasing market demand, a company is considering adding warehouses rather than increasing the capacity of existing warehouses. If the warehouses are added, the network costs most likely will:
When a company adds warehouses to fulfill increasing market demand, the network costs most likely will increase. Adding warehouses introduces additional fixed costs such as rent or mortgage for the new facilities, labor for staffing, and potentially higher transportation costs due to more complex logistics. These costs will add to the overall network expenses.
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.
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.