In an effort to increase their customer service levels and reduce order cycle time, a company is considering adding two additional warehouses to their overall operations. As a result, which of the following statements best reflects the cost impact of the additional warehouses?
A) Lower inventory costs and higher facility costs
B) Higher inventory costs and lower facility costs
C) Higher inventory costs and higher inbound transportation costs
D) Lower inventory costs and lower inbound transportation costs

Question

Quizplus · Accepted Answer

Lower inventory costs and higher facility costsThe additional warehouses will allow the company to hold more inventory closer to customers, which will reduce order cycle time and improve customer service levels. However, the additional warehouses will also increase facility costs.

In an Effort to Increase Their Customer Service Levels and Reduce