Determine which option should minimize storage cost

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Reference no: EM132205367

As a logistics manager, you are required to lease a warehouse space as and when it is needed. It is known as a Third Party Logistics (3PL) storage space/warehouse. The cost information is given below: Option A: Rent as much space as you need and pay $4.00/sq. foot per month. Option B: Rent a manual handling warehouse and its monthly charges include fixed cost of $2500 plus $3.00 per sq. foot of space. Option C: Rent a semi-computerized storage at $2.50 per sq. foot that has a monthly fixed cost of $4,750. a. Write cost functions for the three options. b. Plot the cost functions on a graph paper. Use an appropriate scale c. Determine which option should minimize storage cost for what range of demand.

Reference no: EM132205367

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