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CIPS Exam L4M7 Topic 10 Question 9 Discussion
Actual exam question for
CIPS's
L4M7 exam
Question #: 9
Topic #: 10
[All L4M7 Questions]
Topic #: 10
The minimal total cost is always achieved when there is only one warehouse. Is this statement true?
Suggested Answer:
A
The total cost of storage consists of two different costs:
- The cost of warehouses: each one has a different cost, and each has the cost of stock-holding and stock management included
- The transport costs: the total transport cost reduces as further warehouses mean shorter final delivery to the customers.
Depending on each situation, the optimal number of warehouses varies. Generally, more facilities will increase the cost of warehouses while reduce the transport costs and vice versa.
LO 1, AC 1.1
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