Chapter 7:- Warehousing



Benefits of Warehouse:


Economic and Service benefits:-

1) Consolidation

2) Break-bulk


These are similar to consolidation except that no storage is performed.


a)      Break Bulk warehouse are facilities that receives large shipment of products from manufacturer.


b)     After receiving the large consignment it is broken into small consignment which are delivered to the customer.


c)      A break bulk warehouse or terminal distributes or divides orders and arrange for local delivery.


3) Cross-dock


Cross-Dock facility is similar to break bulk expect that it involves multiple manufactures. It serves primarily as a “distribution mixing center”.


4)     Processing/ Postponement


5)     Stockpiling


Types of Warehouse


1)    Private warehouses


2)    Public warehouses


3)    Contract warehouse


Distinguish between Public warehouse V/S Private warehouse


Parameters Public Warehouse Private Warehouse
Ownership By Government (Rented) By firms owning he product
Flexibility Rigid Highly flexible
Return on Investment Contributes a considerable amount Contributes less
Cost Low Operating Cost High Operating Cost
Economies of Scale Yes No
Range of Services Greater Lesser
Scale of Operations Large Small


Square Root Law




X 2

(X1 )






N1= Number of existing facilities.


N2= Number of future facilities.


X1= Total inventory in existing facilities.


X2= Total inventory in future facilities.


        Warehouse & Distribution Centers      
        Warehouse Distribution Centers    
    Warehousing belongs to an organization. DC is a separate entity.      
    Warehouse stores all the products. DC keeps inventory of high demand items.    
    Warehouse handles products in four stages of DC handles products in two stages i.e. receive and    
    receive, store, pick & ship. ship.      
    Warehouse performs minimum value added DC performs high percentage of value added    
    activities. activities.      
    Warehouse focuses on reducing operating costs. DC focuses on maximizing the profit.    




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