doing a project for auditing... What business risks might be increased by adding additional warehouse location...
doing a project for auditing...
What business risks might be increased by adding additional warehouse location to a company?
Homework Answers
ANSWER:
One of the biggest downsides of adding additional warehouse location is the fixed costs. The additional warehouse will have its own contract for storage and services. Thus indicates paying for double the inventory and increasing costs. Handling costs, labor, energy costs, and technology are all financial risks that must be considered. There will be more work for the company on the forefront with planning and coordination which rises the cost. If the company have an excess inventory on hand, then it would not gain any benefit by keeping the same types of inventory stored in multiple locations. Moreover if company is using LIFO method the reporting inventory will be less than market value
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