1. The Acme Manufacturing Company is concerned about its warehouse needs and how they can best be met. The company produces a line of spare parts for appliances. Due to the combination of production policies and demand patterns, warehousing space requirements vary considerably throughout the year. Space requirements are known with a great deal of certainty because the product line satisfies a replacement market. Growth, or decline, in production and sales is not anticipated in the near future. Monthly sales rates for a typical year are as follows: Warehouse inventory turns at the rate of two times per month. A dollar's worth of merchandise occupies 0.1 cubic feet of warehouse space and can be stacked 10ft. high. The product density is $5 per lb. Given aisles, administrative space, and normal operating efficiency, only 40 percent of the total warehouse space is actually used for storage. A private warehouse can be constructed and equipped for $35 per sq. t. and can be amortized over 20 years. The cost of operation is $0.02 per pound of throughput. Annual fixed costs amount to $10 per sq. ft. of total space. Space may also be rented for a storage charge on inventory of $0.06 per lb per month and a handling charge of $0.05 per lb of throughput. Please calculate the total costs of two situations: (1) Do not build private warehouse, purely rely on public rented warehouse; (2) Build a 40,000 warehouse, and cover the extra demand using rented warehouse when necessary