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A monthly inventory turnover ratio of 2, or 24 turns per year, is to be maintained for the warehouse. Of the total warehouse space,
A monthly inventory turnover ratio of 2, or 24 turns per year, is to be maintained for the warehouse. Of the total warehouse space, 50 percent is used for aisles, and only 80 percent is to be utilized to anticipate variability in space requirements. Each unit is stored in a carton that measures 2' x 2' x 2' and can be stacked 6 cartons high (12 feet high) on racks. The warehouse, with equipment, can be constructed for $30 per square foot, amortized over 20 years, and operated at $0.10 per unit of throughput. Annual fixed costs are $5 per sq. ft. of total space. Assume a 100,000 sq. ft. warehouse is built. February will require more than 100,000 square feet of space (hint for part a) so space may be rented for a space charge of $0.05 per unit per month and an in-and-out handling charge of $0.10 per unit. a) How much space (in square feet) is needed to support the volume in Feb? (2 points) b) What are the Private Space Fixed Costs for Feb? (2 points) c) What are the Private Space Variable Costs for Feb? (2 points) d) What are the Rented Space Fixed (Storage) Costs for Feb? (2 points) e) What are the Rented Space Variable Costs for Feb? (2 points)
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