A large retail chain is considering two warehousing systems for its new distribution center. The cost data is as shown below. (Ignore the time value of money in your calculations.)

Warehousing system Annual fixed cost Variable cost/unit picked

System A $1 million $8

System B $1.5 million $6

a) (4 points) For what annual number of units picked will the total cost of warehousing operations be the same for both systems?

b) (6 points) If the distribution center estimates to pick 200,000 units per year, which system should be considered and what would be the average warehousing cost per unit picked for this system?