Exam 11: Distribution Customer Service and Logistics

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A supply chain:

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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. When United Tools considers its total inventory cost, which of the following would NOT be included? 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. When United Tools considers its total inventory cost, which of the following would NOT be included?

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Maintaining the right level of inventory is easy now that there are tools to precisely forecast and model demand.

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Physical distribution differs from logistics in that

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Using airfreight instead of some other mode of transporting may result in:

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Which of the following statements concerning physical distribution trade-offs is NOT true?

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The total cost approach involves evaluating each possible PD system and identifying all the transportation costs associated with each alternative.

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Transporting costs usually add relatively little to the cost of valuable products.

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A supply chain includes all the activities involved in procuring materials, transforming them into products, and distributing them to customers.

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Bar codes, UPC numbers, and RFID tags make it easy for computers to monitor inventory, order stock, and track shipping costs.

(True/False)
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Which of the following statements about the transporting function is TRUE?

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More freight is carried more miles _____ than any other mode of transportation.

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Modern warehouses typically do NOT have:

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A good marketing manager will try to:

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When planning physical distribution, the marketing manager should:

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A "supply chain" is the same thing as a "channel of distribution."

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The best way to ship a heavy product like iron ore from St. Louis, Missouri, to New Orleans, Louisiana, in the Spring season with no arrival deadline is to use:

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As a percentage of GDP, which of the following most likely characterizes logistic costs incurred in developing economies in Africa?

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With the PD concept, firms decide what specific service level to provide their customers.

(True/False)
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Electronic data interchange (EDI):

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