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Walmart is examining the costs associated with operating a new distribution center. The fixed costs are $10,000,000 per year, and the variable costs are $0.50

Walmart is examining the costs associated with operating a new distribution center. The fixed costs are $10,000,000 per year, and the variable costs are $0.50 per unit handled. Walmart expects to handle 30,000,000 units in the first year. Additionally, logistics costs are estimated to be $5,000,000.

Requirements:

  1. Calculate the total operating costs for the first year.
  2. Determine the cost per unit handled.
  3. Analyze the impact of handling an additional 5,000,000 units on total and per-unit costs.
  4. Discuss the importance of managing logistics costs.
  5. Recommend strategies for optimizing distribution center operations.

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