POLICY:

Materials Distribution Services (MDS) provides storage space and distributes merchandise for UW Departments and State Agencies at cost. This merchandise is not owned by MDS and is not included in MDS inventory.

PROCEDURES:

1. Service Proposal

1.1 MDS will submit a proposal to customers interested in purchasing space and/or distribution services. The proposal will include an estimated annual fee which will equal MDS estimated costs for the coming fiscal year.

1.2 When the proposal is accepted, MDS will enter into an agreement with the customer for provision of services. The agreement will identify services to be provided by MDS, department responsibilities, annual fees and billing procedures.

2. Computation of Storage and Distribution Costs

2.1. Space charges are based on the number of locations needed to store merchandise. Cost per square foot is calculated using rent paid for the materials distribution facility. A Quick Pick location equals actual space of the location plus 3 feet of aisle. Bulk and Overflow locations equal actual location space plus 1/3 of 1/2 of the aisle because they are stored three high.

• Upper Quick Pick Location is equal to 1.25 ft. x 11 ft (8 ft. + 3 ft. aisle) = 13 .75 sq. ft.
• Lower Quick Pick Location is equal to 3 ft x 4.5 ft = 13.50 sq. ft.
• Bulk Location is equal to 4 ft. x 5.3 ft (4 ft. + 1.3 ft. aisle) = 21 sq. ft.
• Overflow Location is equal to 4 ft. x 5.3 ft (4 ft. + 1.3 ft. aisle) = 21 sq. ft.

2.2 Space costs will be computed each month using the following formula and billed to the customer.

• Determine number of quick pick, bulk, and overflow locations used.
• Multiply number of locations used times # of square feet per location for total square feet used.
• Multiply total square feet used times monthly charge per square foot.

2.3 Labor and administrative charges include staff time needed to enter orders and pick, pack, wrap, label and deliver orders. The average salary of warehouse and data entry employees plus the current fiscal year budgeted fringe benefit rate is used to compute the hourly charge.

2.4 If shipping is required, actual shipping cost plus a 25% handling fee is charged.