Amazon and Walmart are two retail giants competing in the e-commerce and brick-and-mortar retail sectors. Both companies incur various overhead costs related to warehouse operations and customer service.

Scenario: Amazon operates fulfillment centers to store and ship products, while Walmart manages its distribution centers for inventory storage and management. Both companies allocate their overhead costs using different allocation bases.

• Amazon's Fulfillment Center Costs:
  • Total Warehouse Costs: $200 million
  • Allocation Base: Total Square Feet of Warehouse Space
  • Total Square Feet (Amazon): 10 million
• Walmart's Distribution Center Costs:
  • Total Warehouse Costs: $250 million
  • Allocation Base: Total Number of Inventory Items
  • Total Inventory Items (Walmart): 50 million

Requirements:

1. Calculate the overhead cost allocation rate per square foot for Amazon's fulfillment centers.
2. Determine the overhead cost allocation rate per inventory item for Walmart's distribution centers.
3. Analyze the differences in cost allocation methods and their impact on the operational efficiency of Amazon and Walmart.