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Warehouse Problem See instruction tab for further information Option 1 Option 2 Option 3 Option 4 Lease cost $250,000 $100,000 $750,000 - Pallet charge in 12.00 14.00 - 20.00 Pallet charge out 12.00 12.50 - Pallet charge per month 5.00 10.00 5.00 20.00 Freight charge per mile 2.10 2.10 2.25 1.55 Miles to plant 15 23 5 48 Variable cost per pallet or total pounds lbs per pallet Pallets per truck Pallets per year Trucks per year trucks per month trucks per week Variable cost per pound 30,000,000 1500 24 Fixed cost Total cost Volume (lbs) 30,000,000 Best option at 30 million pounds

Four Warehouse options have information about the various costs to help make a good economic decision on which is the best choice. Use a formula to calculate each of the yellow boxes on the Warehouse problem page. Note: On variable cost you may use either cost per pound (orange box) or cost per pallet to get your final answer. You decide which you want to use. At present, the plan is to store 30 million pounds of frozen product in a leased warehouse. Cells B13, D13, F13, and G13 are the final total cost for each option and are in gray. Make sure to show your formulas for full credit. All the information and calculations may or may not be needed to calculate cost as there are multiple ways and formulas to get to the correct answers. All of the highlighted boxes must be populated even if you do not use them in the final calculation. All options have good access to the interstate highway system. Option 4 has a rail dock and the others do not. The hours of operation at Options 1 and 2 are 5 am to 1 am while Options 3 and 4 are open from 5:30 am to 1:30 am. Options 1 and 2 use the same outside freight hauler to make deliveries, Option 3 uses a service that uses special software that allows you to track exactly where the trailer is from the time it leaves the warehouse, and Option 4 operates its own fleet of trailers.

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