Higher throughput operations enable private warehouses to:

Private warehouses incur significant fixed costs, such as the building lease or mortgage, material handling equipment, and salaried management staff. These costs do not change with the volume of activity. Higher throughput means a larger volume of goods moves through the facility. This allows the substantial fixed costs to be spread out, or allocated, over a greater number of units, which reduces the fixed cost per unit. This is a fundamental principle of achieving economies of scale in operations.

A. Variable costs (e.g., hourly labor for picking) increase with output volume; they are not "spread out" to reduce per-unit costs.
C. This describes a cost allocation method, not the economic benefit or enablement that high throughput provides to a fixed-cost facility.
D. While higher throughput leads to better facility utilization, "declining overheads" is imprecise. Total overhead (fixed cost) remains constant; it is the per-unit overhead that declines.

1. APICS CLTD Learning System, Module 2, Section C, Topic 1: Warehousing Strategy and Management. The text discusses the cost structures of private vs. public warehousing, noting the high fixed costs of private facilities and the importance of volume for cost justification.

2. Bartholdi, J. J., & Hackman, S. T. (2019). Warehouse & Distribution Science. Georgia Institute of Technology. Chapter 1, "Introduction," discusses the basic economics of warehousing, including the concept of spreading fixed costs over higher volumes to reduce per-unit costs. (Available via Georgia Tech's website).