Bear Plastics manufactures a large variety of plastic shells for ice coolers and

Question

Bear Plastics manufactures a large variety of plastic shells for ice coolers and beverages and markets its products in the central United States. In analyzing its order activity for the last five years. Bear's logistics manager discovered that its business was very seasonal, with most orders placed for delivery between October and March. Analysis of warehouse utilization showed high utilization between April and September, but little use otherwise. In fact, warehouse demand was so high during October-March, public warehousing was used. On the strength of this analysis, the logistics manager will make a recommendation to top management about warehousing option. This involves which basic warehouse decision area? O a. Ownership b. Centralized versus decentralized warehousing O c. Warehouse location o d. warehouse layout

Explanation / Answer

The critical decision here is of ownership of warehouse where the company has to decide if it needs to own a warehouse for a highly seasonal business of 5 months or so, or lease it from the outside parties. It has to outsource some of its requirement of capacity during peak season currently.The cost of ownerhip of the existing warehouse and expenses on outsourced warehouses need to be weighed against the option where entire function is obtained on lease.

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