Question

Which factor below would suggest the construction of a smaller (rather than larger) warehouse?

a) many markets served
b) fewer stockkeeping units (SKUs) carried
c) the need for economies of scale in warehousing and materials handling
d) long production lead times
e) higher levels of customer service expected

Answer 1

The construction of a smaller warehouse is suggested by having fewer stockkeeping units (SKUs) carried.

Step-by-step explanation:

Economies of scale is a factor that suggests the construction of a smaller warehouse. Economies of scale refer to the situation where, as the quantity of output goes up, the cost per unit goes down. In this case, a smaller warehouse would be more cost-effective because it would have fewer stockkeeping units (SKUs) carried, resulting in lower costs per unit.

For example, if a warehouse carries a large number of SKUs, it would require more space and resources, leading to higher costs. On the other hand, a smaller warehouse carrying fewer SKUs would require less space and resources, resulting in lower costs per unit.

Therefore, the factor that suggests the construction of a smaller warehouse is fewer stockkeeping units (SKUs) carried.