Why would you expect the costs to continue to decrease

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Reference no: EM133472215

Case: For the Jade Case Study, in the model, why would you expect the costs to continue to decrease as you add warehouses? In reality, would you expect this to hold up? Why or why not?

In the model, the inbound cost is more expensive than the outbound. So, the closer we can get to customers, the lower the cost. Therefore, the model will continue to add warehouses to get closer and closer.

In reality, the inbound costs are based on some assumption about filling up rail cars. If we have too many warehouses we are shipping to, this will no longer be true. Or, if it is true, then inventory will pile up in all these warehouses, adding to the cost. Finally, there is likely to be a fixed cost associated with the warehouses that we are not modeling, but that is real.

Reference no: EM133472215

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