Unformatted text preview: Professor Denzler BUS140 10:30am 22 October 2008 Warehouse Location Problem From looking at Joe’s solution the first thing that we notice is that he doesn’t maintain within the capacity feasibility of the Baltimore’s warehouse, which has a capacity of 200,000. Even though he meets the demand for each of the cities, he is doing so by operating at a higher capacity that the Baltimore warehouse can sustain. Another thing that we notice from Joe’s Solution Matrix is that he decided to operate from four different warehouses when it wasn’t necessary to do so. All he did, in this case, was add on more total fixed costs and unnecessary variable costs, when he could have been more efficient and more effective had he operated from only two warehouses. I would recommend that Joe operate from only two warehouses, Baltimore and Houston. I would choose to open the Baltimore warehouse because it has a smaller fixed cost of $1,800,000 and the second lowest variable cost of $25/ton. I chose Houston because even though it had the highest fixed cost, its variable costs per variable cost of $25/ton....
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- Economics of production