Fixed costs are items such as:
Rent and Rates on the premises – Obviously the more warehouses that an organisation has, these costs will increase accordingly.
Heat – A larger warehouse will require additional heating to ensure to maintain a suitable working environment.
Power and light – There may be major implications here for a warehouse that has to stock inventory at an ambient temperature.
Insurance on premises – This will increase according to the number of warehouses employed.
Depreciation of capital items or long term rental charges – As the warehouse increases in age its selling value will fall accordingly. This also applies to racking etc. bought to house inventory.
Fixed salaries associated with all the added costs for pensions, national health insurance – these salaries will apply to all personnel associated with the movement and management of inventory.
The characteristic of all these costs is that they remain the same, whether the warehouse is busy or not.
