You are a logistics solutions design analyst at CGK Logistics, a multi-national thirdparty logistics (3PL) services provider. CGK has recently received an invitation to a request for proposal (RFP) from Best Value Stores (BVS), an operator of a chain of supermarkets in Singapore. Specifically, this RFP is for the design and operation of a refrigerated warehouse of about 10,000 square metres (sqm), which will store fresh or chilled food products such as fruits, milk and vegetables. The contract will be for a period of three years. BVS reports on its sustainability initiatives to shareholders annually. To fulfil its commitments to shareholders, BVS intends to award the refrigerated warehouse operations to a 3PL with an innovative design that is not just cost-competitive, but also sustainable. As part of the solutions development process, the property leasing department at CGK has identified a 10,000 sqm facility that is available for lease. It meets the requirements in the RFP from CGK with regard to location and size. The facility is insulated and comes with a working refrigeration system already installed, but the equipment is more than ten years old and is thus not the most energy efficient by today's standards.

You know that energy consumption is going to be a major cost component in any solution for a refrigerated warehouse. Therefore, you have identified three options to improve energy efficiency and hence the carbon emissions performance of the facility. The first solution (Option A) is to upgrade parts of the existing refrigeration system to achieve greater energy efficiency and meet global standards for sustainable warehouses. The second solution (Option B) is to paint the warehouse's roof with a special reflective coating that will reduce heat absorption from sunlight. However, this new paint will need to be reapplied every year as it is prone to environmental degradation and mould buildup, at a cost of $1,500 per year. The third option (Option C) is to implement both Options A and B concurrently. Table 4.1 below shows the costs and expected performance of the three options.