Final answer:
A private warehouse is preferable when a business requires more control, specialized storage, or can leverage economies of scale to reduce costs, as seen with companies like Amazon.
Step-by-step explanation:
Use of a private warehouse may be a better choice than a public warehouse when a business requires specialized storage, values more control over its inventory, and when it can benefit from economies of scale. For example, businesses shipping finished goods over congested networks may see an increase in costs and a reduction in profits, making locations near uncrowded freeways or with access to rail or water transport more desirable for private warehouses to ensure cost-effective transport options.
Similarly, companies like Amazon have demonstrated that large-scale private warehouses in low-rent locations that are highly computerized can result in significantly lower average costs per sale due to economies of scale. Additionally, products like fruits and vegetables might need refrigerated and well-ventilated storage conditions, which are sometimes more feasible to maintain in private, specialized warehousing facilities.