Chapter 11: Distribution Customer Service & Logistics

Storing allows mass producers to ______.

achieve economies of scale

Amazon.com offers speedy distribution options to its customers. These customers are willing to pay a premium for this quick delivery. In these situations, Amazon.com should use ______ as a transport method

air freight

What can companies use to improve efficiency and add value for the customer when providing a large number of products?

data analytics

In general, government regulation of transportation systems is ______ around the world.

decreasing

A _____ is a type of storage facility that minimizes storing costs by expediting the flow of goods

distribution center

Galveston Machinery produces large quantities of its component parts for the oil and gas industry in Galveston, Texas. The company then ships the parts to its customers worldwide. The savings from producing in one location more than offset the added cost of transporting the parts to customers. This is an example of

economies of scale

In order to address problems with sharing information between different computer systems, many firms rely on ______ to create a standardized data format.

electronic data interchange (EDI)

Jonah Products operates an Internet site. They have received customer complaints because they often accept orders for products that are not available for shipping. This is a(n)

ethical issue

Electronic data interchange is designed to _.

facilitate the sharing of information along an entire supply chain

Logistics also called physical distribution (PD) is the transporting, storing, and handling of goods in ways that match target customers' needs with a

firm's marketing mix

The final customer only becomes aware of physical distribution when it is

ineffienct

In coordination efforts of physical distribution, ______ sharing is most important in finding solutions to the problems that tend to arise

information

A firm that counts the amount of goods it has stored in its warehouse is taking stock of its _

inventory

Physical distribution happens primarily away from customers' attention. In other words, physical distribution is typically ______ to most customers.

invisible

One thing that storing always does is ______.

involves cost

AT&T business services might guarantee that there is a 48-hour turnaround time for all repair orders. In order to deliver on that promise, commonly needed parts are available on the repair trucks and emergency parts are delivered overnight. Both of these factors affect the __ that AT&T can promise.

level of service

Transporting, storing, and handling goods in ways that match target customers' needs with a firm's marketing mix is called

logistics

Developed economies, such as that in the United States, tend to spend a __ percentage of GDP on logistics-related costs than developing economies do

lower

Even though most customers desire very good service at a very low price, marketing managers must understand that it usually costs _ to provide higher levels of service.

more

It has been estimated that, on average, ______ of a firm's total carbon emissions come from transportation

more than 50 percent

One of the significant advantages of just-in-time inventory systems for business customers is that it reduces their ______ costs.

physical distibution

Another common name for logistics

physical distribution

In the United States, Shell Oil primarily uses ______ to transport its crude oil and natural gas from its oil fields to its refineries.

pipelines

A firm that owns or leases a storage facility for its own use is using a _____ warehouse.

private

Storing facilities owned or leased by companies for their own use are called ______ warehouses

private

Silver Eagle Distributors is the sole owner of a storage facility where it stores long-term, excess inventory from its manufacturing plant. This is an example of a ______.

private warehouse

___ warehouses are storing facilities owned or lease by companies for their own use, while ___ warehouses are independent storing facilities

private; public

A common problem with mass-produced goods that can be addressed by storing is that ______.

production does not match consumption

Storage facilities that are not owned or leased by a single goods-producing firm are known as ______ warehouses

public

Joseph Enterprises Inc. produces "Chia Pets" during the holiday season in the United States. The company does not have a need for storage space on a regular basis. Joseph Enterprises should make use of a __

public warehouse

When firms utilize a just-in-time system, it is critical that the supplier has high ______ in all physical distribution activities.

quality control

Dow Chemical is a provider of plastics, chemicals, and agricultural products. These heavy and bulky goods need to be shipped over long distances within the United States and at a moderate cost regardless of the time it takes them to reach their destination. Dow should use ______ as a transporting method

railroads

By using the physical distribution concept, firms focus on offering targeted levels of ______ while diminishing costs

service

Tyler Industries coordinates its channel system to ensure that members focus on the needs of the end user (customer). The overall goal is to provide a targeted level of ______ while minimizing costs.

service

To better respond to customers' needs, intermediaries should ______ stock at convenient locations.

store

Amazon.com incurs costs every time goods are put in storage and then, again, when the goods are removed to be shipped to customers. This physical handling is considered a ______ cost

storing

Best Buy places appliances on display to entice customers to buy. Each of these appliances carries the interest expense of the money used to purchased it. The appliances require costly insurance to cover the risk of fire or theft. All of these costs are associated with __

storing

Maintaining a supply of goods so they are available when they are needed is called

storing

A distribution channel is part of a broader network of relationships known as a _____ _____ that participates in the production, distribution, and sales of a product.

supply chain

John Deere is the leading manufacturer of agricultural machinery in the world. To meet the needs of its customers, Deere's management must coordinate delivery of parts needed to build its tractors, harvesters, and sprayers. Deere must also coordinate deliveries to the dealers that stock and sell its products. John Deere relies on its __________ to coordinate all of these activities

supply chain

The Montage Co. has misunderstood their suppliers ' capabilities, resulting in production delays and unhappy customers. This is a(n) __ problem

supply chain

The complete set of firms, facilities, and logistics activities that contribute to the production and distribution of finished or intermediate products is called the _.

supply chain

Efficiency in distribution centers is primarily based on ______.

technology

The roads and railways required for a company to transport its goods are a reminder of how _ can influence transportation of products.

the government

The roads and railways required for a company to transport its goods are a reminder of how __ can influence transportation of products.

the government

An important development that has helped firms to coordinate activities throughout the entire supply chain has been increasing use of ______ to share information

the internet

The ______ approach involves evaluating each possible physical distribution system and identifying all of the costs of each alternative

total cost

Zento, located in Wisconsin, airfreights fresh produce from Mexico. While air freight charges are high, the rate of spoilage and waste is low. This is an example of a company using the

total cost approach

Costco offers a variety of frozen shrimp imported from Southeast Asia. There are very high shipping costs to deliver the shrimp to the retail stores, but they are less expensive than it would be to stock and maintain a supply of fresh local shrimp in each store. This saves customers money and Costco offers the product because it has calculated the _______ of choosing to sell the Asian shrimp.

total costs

Nancy goes to Target to buy a new television. The store keeps a limited amount of inventory on hand. However, the store manager promises to rush order a television for Nancy in order to not lose her business. The manager is _______ the cost of storing inventory for the extra cost of speedy delivery

trading

When operating within normal parameters, which of the following transportation methods has the least amount of impact on the environment over a long distance?

trains

Which marketing function is responsible for making products available when and where the customer needs them?

transportation

The physical distribution concept argues that logistical activities, including transportation, storage, and handling of products, should be

treated as a single system to minimize the costs of maintaining a given customer service level

When moving small quantities of goods over short distances, ______ provide the most flexibility and speed.

trucks

The lowest-cost, but also the slowest, method of shipping heavy freight is by

water

Which four of the following are examples of factors that affect physical distribution service levels?

- Procedures for handling returns - Advance information on product availability - Damage in shipping, storing, and handling - Accuracy and reliability in filling orders

Which of the following items have been replaced by electronic data interchange (EDI) in some companies?

- Purchase orders - shipping reports

Which two of the following are possible drawbacks of private warehouses?

- Purchasing or leasing a space may be expensive - Some space may go unused

What are some examples of common transportation infrastructure challenges in developing countries?

- Roads are often poor - Rail systems may be limited - Ports may be underdeveloped

Which of the following are expenses that contribute to total inventory costs?

- costs of risks such as theft and fire - costs of inventory becoming obsolete - handling costs - cost of maintaining storage facilities

The total cost approach considers physical distribution costs that might otherwise be ignored, including

- inventory carrying costs - the cost of lost sales due to poor customer service

Just-in-time systems have gained popularity because they allow firms to

- maintain target levels of customer service - cut inventory costs - minimize the amount of time it takes to replace inventory that has been sold

There are trade-offs involved in physical distribution decisions. Which of the following are included in those trade-offs?

- sales - costs - customer service levels

What are three major benefits of shipping products via air? (Check all that apply.)

-Less damage -Lower theft rates -Less spoilage

What are two characteristics of a distribution center? (Check all that apply.)

-Speeds the flow of goods from producer to purchaser -Minimizes storing costs

Although more expensive than using distribution centers, shipping finished goods directly to retail stores has several benefits, including ______. (Check all that apply.)

-stronger relationships with retailers -improved understanding of customer needs -faster delivery times

Physical distribution functions must be coordinated within the channel. Marketing managers in charge of this coordination effort must decide who will ______ the goods. (Check all that apply.)

-transport -store -handle

In the developing economies of Latin America, logistics costs are typically ______ or more of GDP

30%

Which of the following best describes the physical distribution customer service level?

It refers to how quickly and reliably a company can provide inventory to customers.

_____ also called physical distribution (PD) is the transporting, storing, and handling of goods in ways that match target customers' needs with a firm's marketing mix—both within individual firms and along a channel of distribution

Logistics

When Target entered the Canadian market, it struggled with deliveries and customers were disappointed by the empty shelves at the store. What was Target's reaction to this situation?

The company could not recover and closed all Canadian stores.

Pipelines are used by

oil-producing and oil-consuming countries

The __ function depends on the product, other physical distribution decisions and the service level that the company wants to provide.

transporting

The marketing function of moving goods is called

transporting

When a product is valuable relative to its size and weight, ______ adds little to the overall cost

transporting

Dole Food Company is the largest producer of fruits and vegetables in the world. The company needs a mode of transportation that is able to handle relatively small quantities of goods over the short distances from its distribution centers to its customers. Dole should use ______ as a transportation method

trucking

Ideally, a product will spend ______ on distribution center shelves.

almost no time

Inventory refers to the ______ of goods being stored by a firm

amount

It is hard to provide good service

at a very low cost

What are two benefits of containerization?

- Increased protection of goods - Simplified handling process

Which of the following best defines storing?

It is a componet of the marketing function that involves holding goods until they are needed

Kim's company makes teddy bears that sing Christmas songs and during the busy season, the company needs short-term storage space. What type of facility would be best for her company to use?

Public warehouse

Transporting a group of goods in a single protective container, also known as __, greatly simplifies the physical distribution process

containerizing

In order to improve the advantages of physical distribution, there must be ______ all the members of the channel

cooperation among

Dell Computers needs parts to be delivered when scheduled in the manufacturing process of their laptops computers. If the parts are late, it makes it a challenge for Dell to deliver the laptops to customer as promised. In regards to this issue, Dell is primarily concerned with the _____ that its suppliers have to offer.

customer service level

To boost sales growth, Procter & Gamble's shampoo brand, Head & Shoulders, will target remote villages in India. One of the challenges the company faces is the lack of good roads to reach the targeted consumers. The route calls for less-efficient modes of transportation. Procter & Gamble understands that transportation ______ can cost more.

in developing regions

Interest expense, costs of storage facilities, and costs of risks and damage are all ______ costs.

total inventory

Honda Motor Company needs to ship its heavy freight (i.e., cars, trucks, and SUVs) over great distances from Japanese manufacturing facilities to international markets. Honda should use ______ as a shipping method.

water transport

When Sarah buys a winter coat from LL Bean, she expects it to be as advertised and to last for many years. This is because LL Bean high wants to maintain a level of __ service

customer

A firm that consistently delivers customers' goods quickly and accurately exhibits a high

customer service level

Which of the following statements about transporting costs are true?

- Costs associated with transporting can influence which target markets a company can serve - Transporting costs can in some cases significantly increase costs.

True or False: Storing only affects the activities of the firm holding the goods

False

True or false: Storing only affects the activities of the firm holding the goods.

False

True or false: Public warehouses can provide all the services that a company's own warehouse can provide.

True

Use Exhibit 11.5 to rank the different methods of transporting in terms of delivery speed, from slowest (at the top) to fastest (at the bottom).

Water Pipeline Rail Truck Air

Use Exhibit 11.5 to rank the different methods of transporting in terms of cost, from lowest (at the top of the list) to highest (at the bottom of the list).

Water pipeline rail Truck air

A common ethical issue for Internet retailers regarding physical distribution practices concerns __

communication product availability