Exam 11: Distribution Customer Service and Logistics

Use this information for question that refer to the United Tools case. Terry Harter is marketing manager for United Tools and Mike O'Reilly is the firm's logistics manager. They work together to make decisions about how to get United's hand and power tools to its customers-a mix of manufacturing plants and final consumers (who buy United tools at a hardware store). United Tools does not own its own transport facilities and it works with wholesalers to reach its business customers. Together, Harter and O'Reilly try to coordinate transporting, storing, and product handling activities to minimize cost while still achieving the customer service level their customers and intermediaries want. This usually requires that United keep an inventory of most of its products on hand, but demand for its products is fairly consistent over time so inventory is easy to manage. Harter has identified four options for physical distribution systems she could use to reach two of her key wholesalers, Ralston Supply and Ricotta Tool Co. The total cost for each option-and the distribution service levels that can be achieved-are as follows: 1. Airfreight 2. Inland waterways 3. Trucks 4. Rail and regional warehouses Total Cost \ 1,000,000 \ 300,000 \ 500,000 \ 650,000 Distribution Service Level 95 percent 60 percent 70 percent 80 percent Ralston Supply expects a very high level (90 percent) of distribution customer service. Ricotta Tool Co. is willing to settle for a 70 percent customer service level, even if that means some products will occasionally be out of stock, if it gets products at a lower price. For its large retail hardware customers (like Home Depot), United regularly ships smaller orders directly to individual stores or in some cases to the retail chain's warehouses. Cross-country shipments usually go by rail while regional shipments usually go by truck. United Tools is considering building a new private warehouse for its tools. Which of the following are benefits of private warehouses?

Which of the following is true regarding JIT systems?

Physical distribution

An elite fashion manufacturer distributes apparel products in retail outlets worldwide. The company chooses to forego coordinating physical distribution functions with other firms in the distribution channel. Which of the following is most likely to occur as a result?

In both supply chains and channels of distribution, the primary aim should be for each firm to keep its own costs as low as possible.

Retailers selling a new product that is in hot demand-like the latest DVD release or a best selling book-would be unlikely to incur higher costs for faster delivery.

Regarding the storing function:

Information technology helps physical distribution in what ways?

Shipping by air

A major benefit of _____ is that it protects the products and simplifies handling during shipping.

A distribution center is a special kind of warehouse designed to perform regrouping activities.

For coordinating logistics activities among firms, which of the following statements is true?

Which of the following statements about inventory and storage is TRUE?

A "distribution center" is a special kind of public warehouse designed specifically for storing perishable products.

A marketing manager should never increase the total cost of distribution-even if this would result in a better customer service level for his target market.

In a firm that fully implements the physical distribution concept:

When Sony manufactures and packages DVD players in Japan, stores them in large 8'x8'x20' "boxes," and then ships these boxes to Los Angeles by boat, this is an example of:

Which of the following statements about supply chains is FALSE?

Which of the following statements is NOT TRUE?

Goods that might become separated or damaged during transport can benefit from containerization in shipping.