Exam 11: Distribution Customer Service and Logistics

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. Which physical distribution system is best suited for Ralston Supply?

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

Whenever Product includes a physical good, Place requires logistics decisions.

Efforts to reduce the environmental effects of transporting usually increase the firm's distribution costs.

Which of the following statements is NOT TRUE?

The physical distribution concept seeks to minimize the cost of distribution for a given customer service level.

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:

Which of the following products would have the lowest transporting costs as a percentage of the selling price?

The term "supply chain" can be misleading because the chain typically involves only two firms: a vendor (selling firm) and a customer (buying firm).

Logistics costs vary little between developed economies like the U.S. and developing economies like Africa.

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

For short distances and higher-value products, trucks may charge higher rates, but provide slower service.

The primary function of a ______________ is to speed the flow of products and avoid unnecessary storing costs.

The railroad service which picks up truck trailers at a producer's location, loads them onto rail flatcars, hauls them close to the customer, and then delivers them to the buyer's door is: