Exam 11: Distribution Customer Service and Logistics

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How PD functions are shared will have the greatest effect on which of the other three Ps?

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Tammy works in transportation for a company that manufactures tractors and other farm equipment in China for the U.S. market. Cost is her primary concern in getting products to farm states in the U.S. Midwest. Which mode(s) of transportation would you suggest?

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The physical distribution concept focuses on lower costs and better service to increase customer value.

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Piggyback service means

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The main function of a "distribution center" is to speed the flow of goods and avoid unnecessary storage.

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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. It appears that United Tools: 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. It appears that United Tools:

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Regarding alternative transporting modes, which of the following statements is TRUE?

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A manufacturer that transports products to retail outlets directly instead of using a distribution center is most likely to encounter which of the following?

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The best way to ship a large shipment of coal (which is a heavy and bulky good) from Pennsylvania to California at a relatively low cost would be to use:

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For which of the following goods would air be the least useful mode of transportation?

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The physical distribution concept is based on the idea that selecting the lowest cost transporting alternative and the lowest cost storing alternative will result in the lowest total distribution cost.

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It is usually most economical to ship bulky nonperishable items, such as coal and iron ore, by

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Which of the following statements about supply chains is FALSE?

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Containerization:

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A channel of distribution for a product involves more firms than a supply chain for the same product.

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Which of the following observations about the total cost approach is NOT true?

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Transport costs represent a significant part of the cost of products that are already valuable relative to their size and weight.

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Which of the following statements about electronic data interchange is FALSE?

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The "total cost approach" to physical distribution management:

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Trucks

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