As the number of stocking points (DCs) is decreased in a distribution network, fixed costs will _____ and variable costs will _____.
A) decrease; decrease
B) decrease; increase
C) increase; increase
D) increase; decrease

Question

Quizplus · Accepted Answer

As the number of stocking points (DCs) is decreased in a distribution network, fixed costs will decrease (due to the elimination of costs associated with maintaining and operating the DCs) and variable costs will increase (due to the increased transportation costs associated with shipping products from a smaller number of DCs).

As the Number of Stocking Points (DCs) Is Decreased in a Distribution