-Calculate the cost of eliminating our wholesalers • Revenues are $230 million • We will have to pay 5% of revenues for transportation. • We will have to pay 10% of sales to cover inventory costs. • A warehouse costs $2.5 million a year to run and maintain. We need 12 warehouses to stock our inventory. What is the cost of vertical integration in revenue dollars?
-Calculate the cost of eliminating our wholesalers • Revenues are $230 million • We will have to pay 5% of revenues for transportation. • We will have to pay 10% of sales to cover inventory costs. • A warehouse costs $2.5 million a year to run and maintain. We need 12 warehouses to stock our inventory. What is the cost of vertical integration in revenue dollars?
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter14: Transaction Costs, Imperfect Information, And Behavioral Economics
Section: Chapter Questions
Problem 2QFR
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Question 1--Calculate the cost of eliminating our wholesalers
• Revenues are $230 million
• We will have to pay 5% of revenues for transportation.
• We will have to pay 10% of sales to cover inventory costs.
• A warehouse costs $2.5 million a year to run and maintain. We need 12 warehouses to
stock our inventory.
What is the cost of vertical integration in revenue dollars?
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