A Costing Model for Out-Sourced Versus in-House Product Storage
Storage activities typically account for 20% of the logistics costs. Management has two main options
available in terms of product storage i.e. using an in-house private storage or using publicly owned storage
facilities. Typically, a company would use a cost effective hybrid strategy in the middle of these two pure
options. An important decision, therefore, is to decide the level of private ownership and the level of
outsourcing based on accounting cost considerations. The present paper conducts a costing analysis and suggests
an optimal strategy to address this decision.
Keywords- Product Costing, Outsourcing