Question

Storage Solution Ltd. Is a large warehousing network company operating through a chain of warehouses at 40 different locations across India. The company now intends to undertake computerization of its owned ware houses as it seeks to provide better value added and cost effective solutions for scientific storage and preservation services to the market participants dealing in agricultural products including farmers, traders, etc.

In context of the above case:

1. How is the decision to undertake computerization of owned warehouses likely to affect the fixed capital requirements of its business?

2. Name any two sources that company may use to finance the implementation of this plan

Answer 1

1. The decision to undertake computerization of owned warehouses will increase the fixed capital requirements of its business both in present and future as after sometime, the technology being used will become obsolete and need up gradation.

2. The company may use retained earnings and take loans from financial institutions to implement this plan.