Wisdom for Warehousing Transcript

7

Special opportunities to procure including end-of-life inventory for key products and significant discounts for products with low cost and likelihood of obsolescence may justify large inventory acquisitions.

The most expensive cost components of getting chocolate candy to the shelf is sugar, cocoa, and manufacturing. As a result, candy companies take advantage of low prices on sugar and cocoa and procure in large quantities. In addition, since the shelf life is long and the probability of obsolescence is low, they make large batches of candy at once. The procurement and production lot sizes are housed in large warehouses.

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