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.
Author: liv daAnswer:
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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