Exam 12: Distribution Customer Service and Logistics

The "supply chain" concept refers to the idea that distribution can usually be reduced if the firm that is the "weakest link" in the channel of distribution is eliminated.

A channel of distribution is part of a broader network of relationships called a supply chain.

Which of the following does NOT contribute to total inventory cost?

Transporting cost as a percentage of selling price is lowest for:

Sysco is a good example of a company that uses technology to make its distribution centers more efficient.

Transporting by air:

A supply chain:

Most ethical issues in the area of physical distribution are concerned with:

_____ as a mode of transport serves a very limited number of locations but has a high dependability in meeting schedules.

Airfreight generally increases both transporting cost and the total cost of distribution because it tends to add to inventory costs, spoilage, theft, and damage.

In the U.S., there is little competition among transporting firms for shipping business because government regulations control most transporting rates, routes, and schedules.

In a firm that fully implements the physical distribution concept:

After evaluating all of its alternatives and the costs of each, Vegpro Kenya decided the most efficient way to quickly get its fresh vegetables from Nairobi to European cities was to use air freight. What approach did it use in making this decision?

Loading truck trailers on railcars for shipment closer to the trucks' destination points is called "piggyback service."

A merchant wholesaler is considering four physical distribution systems and estimates the total cost and customer service level for each as follows: The best alternative is:

Berry Bros. wants to ship a somewhat bulky, high-valued commodity a short distance--and it is seeking low-cost and extremely fast service. Berry should use:

In countries where physical distribution systems are inefficient, consumers face shortages of the products they need.

Use this information for questions 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: 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. -To help in managing excess inventory, United Tools would most likely use:

Information technology involves a tradeoff because it cannot improve service levels and cut costs at the same time.

Just-in-time (JIT) delivery