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Abstract
The real costs of warehouse equipment can be determined fairly easily by using spreadsheets and good maintenance records. Updates can be done periodically, with summaries made once a year around budgeting or some other cycle. The benefits of determining costs are: 1. knowing true costs, 2. building a case for replacements, and 3. knowing the true productivity of the warehouse. The 2 main cost areas for equipment costs are fixed ownership costs and variable operating expenses. Ownership costs include the cost of acquisition, insurance and taxes, and charges for the use of capital that is tied up in the purchase of equipment. Operating costs are the costs of energy and maintenance. The total costs of equipment are usually captured as a total cost for a period, but the costs can be divided by periods of time or units of output to determine a per unit cost of processing. Cost analysis can be applied to leased equipment as well.