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1. What kinds of expenses would be included in distribution expenses?
2. Why should distribution expenses be planned for each geographic territory and product line? Or not? Do we take into account the proximity of our local warehouse to our customer base?
For example, at one company where I was Controller, my department was responsible for inventory control at 40+ public warehouses throughout the U.S. Our budget for distribution costs would have included an annual evaluation of where warehouses were located, why so, and how much inventory we needed to keep at each location.
3. Should management consider trade offs between storing product in more locations in different territories, versus shipping product longer distances to customers? Why or how so? What are some concerns about having specific SKUs of your inventory spread around in various locations?
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