From the course: Understanding Logistics
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How warehouses balance costs
- Simply put, a warehouse as a pretty large building used to store material, components, and finished goods until you need them. Simple concept, but their importance is critical to business success. A warehouse differs from a distribution center. You store things in warehouses before you're ready to distribute them. Certainly you can use the same building for both storing and distributing and many small businesses do so. But for now, we'll consider the warehouse as a separate entity. When you consider the cost of land, buildings, equipment, workers, and inventory, warehouses are expensive to build and expensive to operate. So you must consider four distinct cost trade-offs when managing warehouses. The first is transportation costs. By locating your warehouses close to your suppliers and your factories, you're able to save on shipping costs because goods can be sent by rail and in full truckloads. But you don't want to…
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