One of the most difficult decisions to make in storage space planning is the portion of the peak storage requirement to accommodate. If the duration of the peak is short-lived, and the ratio of the peak to average ratio is high, then temporary space (outside warehousing and/or trailer storage) should be considered to accommodate the peak storage requirements. If the duration of the peak is for an extended period, and the ratio of the peak to average ratio is low, then the storage area should be sized at or very near peak requirements.
Let’s suppose the peak storage requirement is double the average requirement, and that peak only lasts for two weeks. Should I plan to build for the peak requirement, or something much less than that? If I built for the peak in that scenario, I would be only half occupied for 50 of the 52 weeks in the year. To deal with the peak requirement for a short time we could utilize trailer storage, off-site warehousing, and/or ask our suppliers to delay shipping our inbound product for a short period of time. The general principle is that the lower the peak to average ratio, and the longer the duration of the peak, the closer to the peak requirement I should build to.
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