Reference no: EM132648846

In a recent Wall Street Journal article ("The Price You Pay for Water at the Airport," Scott McCartney, April 22, 2015), the cost of a bottle at various airports was compared to the cost of that same bottle of water at a convenience store.

A 20-ounce bottle of Dasani water typically costs about $0.99 at a convenience store. At the JFK International airport in New York City, that bottle of Dasani water is $2.89.

An airport store operator interviewed for the WSJ story stated that the costs of operating airport shops are more expensive than other retail stores because:

1. Off-airport warehouses are needed due to limited inventory space
2. Deliveries to stores are usually made during off-peak hours
3. Deliveries are made in small batches so that everything can go through airport security screening

Questions

Question 1: Is the cost of an off-airport warehouse considered to be a unit-level, batch-level, product-level, or facility-level cost as it relates to:

1. The airport store
2. An individual bottle of water

Question 2: Describe the costs that could be incurred in a small batch delivery of two cases of Dasani water to the store inside the airport from the off-airport warehouse?