Capitalism 2 and Capitalism Lab Forum

I always assumed that warehouses were only good for lowering your transport cost's never thought about using them as ad-agencies. Damn thats a good idea

Dav3 wrote:I always assumed that warehouses were only good for lowering your transport cost's never thought about using them as ad-agencies. Damn thats a good idea

Actually warehouse doesn't lower transport cost, most of the time you'll pay extra freight cost (since instead of directly from source to destination, it's from source to warehouse and then warehouse to destination). But by reducing fluctuation, or increase utilization, or reduce the number of factories needed, your overall overhead marginal cost can be lower. Besides if you only sell products as wholesalers, warehouse is more effective as "wholesale retail store".

counting wrote:

Dav3 wrote:I always assumed that warehouses were only good for lowering your transport cost's never thought about using them as ad-agencies. Damn thats a good idea

Actually warehouse doesn't lower transport cost, most of the time you'll pay extra freight cost (since instead of directly from source to destination, it's from source to warehouse and then warehouse to destination). But by reducing fluctuation, or increase utilization, or reduce the number of factories needed, your overall overhead marginal cost can be lower. Besides if you only sell products as wholesalers, warehouse is more effective as "wholesale retail store".

Not to manage the flexibility it gives you if you need to open a larger factory.... just close the small factory open the large one and link done. Now all your firms that were buying from that warehouse is getting supplied by your new factor and your customers gets greater access to your products. Its also helpful by ensuring the old inventory is sold before the new (FIFO)

Regarding Warehouses. So my farming and supermarket business is going OK. If I get all my farms up to 100 for example and they sell frozen chicken.

Does it make sense to then ship all the frozen chicken from all the different farms to warehouses, then the supermarkets purchase from the warehouses?

Another question regarding my business is why are the Cost+Freight so different between the cigarettes and cigars?





They are both using the same Tobacco and the same Timber. Is the price difference in cost and freight simply just because cigars are bigger, sell at a higher price and taking into account the image, the cigars come in boxes?

Camio wrote:

jondonnis wrote:Another question regarding my business is why are the Cost+Freight so different between the cigarettes and cigars?

They are both using the same Tobacco and the same Timber. Is the price difference in cost and freight simply just because cigars are bigger, sell at a higher price and taking into account the image, the cigars come in boxes?

That kinda awnsers it right there in a nutshell

Cigs packs are lighter and smaller than cigars boxes. Just like in real life, freight for cigs packs should be less than cigs boxes. Cigs carton would cost more freight than cigs packs.

Yep, the absolute values of the base cost and freight cost of the goods are not important, but their ratio. Put them at the price equal to their material cost(exclude freight), and see which one has a higher base-cost-to-freight ratio (most of the time retail revenue matters more compare to few percentage of freight cost). The freight cost has fixed value per unit per distance determine by goods type. This is the wiki to freight cost analysis (it's done with an early version, but mostly still true).

http://capitalismlab.wikia.com/wiki/Fre ... e_Analysis

Camio wrote:

jondonnis wrote:Regarding Warehouses. So my farming and supermarket business is going OK. If I get all my farms up to 100 for example and they sell frozen chicken.

Does it make sense to then ship all the frozen chicken from all the different farms to warehouses, then the supermarkets purchase from the warehouses?

Shipping directly from farms to factories is just fine. You'll save on the freight (double shipping) and monthly cost of not having that warehouse just sitting there, serving no real purpose. You also save the codt of building the warehouse in the first place and setting it up.

I only use warehouses for ads.

Actually it depends on many factors, like number of farms, number of supermarkets selling, number of cities and customers, wage rate difference between cities, demand quantity (affected by rating and price), and most important of all locations between each others.

For a situation where there are many cities, you would need lots of farms. Since average population is 2 million, monopoly in 7 cities generate about 4 level 9 dedicated frozen chicken large farms worth of demand at average 30+ rating. And if you place all large farms in a super low wage city to cut overhead and salaries, it make sense to use a centralized warehouse near those farms to delegate the demand of 7 cities and many supermarkets from 4 large farms, otherwise it will be difficult flipping through farms and sometimes required more farms than needed.

However, if you choose to spread out your farms in different cities, and provide frozen chicken locally, than you better stick to direct farms to supermarkets design, unless there are cities with small population and local farms are excessive. The freight cost depend heavily on distance between cities, so no clear cut to which is better. Usually if you can supply 2 cities with just 1 large farm than 2 medium farms, you don't need a warehouse. However if you need 3 medium farms to supply 2 cities, and 2 large farms produce excessive supply, use a warehouse to balance out the supply of 3 medium farms is preferable (for frozen chickens, probably local farms are still better, since freight cost is quite heavy for frozen chicken across different continent cities, also the rating mostly depend on price and quality)

There is no clear way to tell which method is better, but using a warehouse generally keep things run smoothly and not affecting the profit too much, sometimes even increase profit margin due to smooth supply and reduce number of farms required. Generally speaking, warehouse make management much easier (reduce micro management a lot), since you only need to choose from warehouse instead of multiple farms, also you don't need to sacrifice space for inventory units in farms to smooth fluctuation of demand due to economic cycle.

P.S. I am curious though, which would perform better with the same setting, centralized frozen chicken farms with warehouse, or local farms without warehouse. Perhaps we should run experiments to figure it out.

Now using the Warehouse Showroom strategy to make the failing retail stores make a profit. Working nicely

jondonnis wrote:Now using the Warehouse Showroom strategy to make the failing retail stores make a profit. Working nicely

Remember one firm making profit doesn't mean your over-all profit margin increases. You just shift expenses from store to "showroom", nothing is changed (actually cost a little more since warehouse has it's own overhead and salary expenses). And sometimes place advertisement to all media firms are not ideal in the long run. Over time new firms will continued to be built by AIs. When there are more than 1 firm of the same type, usually you'll need to "rotate" through different media firm if you want to be cost efficient with advertisement expense (Or if you are rich enough in the very late game, just buy out all media firms and max-out advertisement budget, since you are paying yourself)

This is a map seed I generated that has clusters of 3 cities near China, 2 cities in USA, and other 2 far away cities in New Zealand and South Africa. Should be quite good for testing whether distributed local farms, or centralized farms/warehouse, or regional sharing farms worked better for frozen chicken. Only use farms for frozen chicken and retail stores, no other firms or HQ to affect the experiment result. I'll do a few testing games myself later.