L4M7 Exam Dumps : Whole Life Asset Management

Explanation

Consignment stock is stock legally owned by one party, but held by another, meaning that the risk and rewards regarding to the said stock remains with the first party while the second party is re-sponsible for distribution or retail operations. Ownership of consignment stock is passed only when the stock is used (issued or sold in the case of a shop). Unused stock in a warehouse may be returned to the supplier when it concerns standard manufactured products. With customer specific items, agreements concerning returning products, should be negotiated.

Explanation

The total cost of storage consists of two different costs:

- The cost of warehouses: each one has a different cost, and each has the cost of stock-holding and stock management included

- The transport costs: the total transport cost reduces as further warehouses mean shorter final delivery to the customers.

Depending on each situation, the optimal number of warehouses varies. Generally, more facilities will increase the cost of warehouses while reduce the transport costs and vice versa.