Deck 12: Distribution Customer Service and Logistics

Question 1

A marketing manager should never increase the total cost of distribution--even if this would result in a better customer service level for his target market.

Answer 1

False

Question 2

Logistics focuses on the handling of goods along a channel of distribution but not within individual firms.

Answer 2

False

Question 3

Retailers selling a new product that is in hot demand -- like the latest DVD release or a best selling book -- would be unlikely to incur higher costs for faster delivery.

Answer 3

False

Question 4

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

Question 5

Higher physical distribution service levels is not a source of differentiation.

Question 6

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

Question 7

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

Question 8

Physical distribution is the part of marketing that is visible to most customers.

Question 9

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.

Question 10

Better information flows make it easier to coordinate activities, improve efficiency, and add value for the customer.

Question 11

For many physical goods, firms spend half or more of their total marketing dollars on physical distribution activities.

Question 12

Most physical distribution decisions involve trade-offs between costs, the customer service level, and sales.

Question 13

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

Question 14

A firm may spend 50 percent or more of its total marketing dollars on PD activities.

Question 15

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

Question 16

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

Question 17

Advance information on product availability affects physical distribution (PD) service levels.

Question 18

The PD concept seeks to maximize the profit for a given customer service level.

Question 19

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

Question 20

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

Question 21

The "total cost approach" to physical distribution management involves evaluating all the costs of alternative physical distribution systems, including transporting, storing, and handling costs.

Question 22

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

Question 23

The "total cost approach" to physical distribution focuses exclusively on the total cost of transporting a product.

Question 24

A channel of distribution is part of a supply chain.

Question 25

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

Question 26

JIT shifts greater responsibility for physical distribution activities forward in the channel.

Question 27

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.

Question 28

Just-in-time delivery systems typically shift more responsibility for PD activities to the customer rather than the supplier.

Question 29

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

Question 30

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

Question 31

Most marketing functions can be shared in a channel, but the storing function is almost always handled by the producer.

Question 32

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

Question 33

Every firm should try to use the just-in-time approach to physical distribution.

Question 34

In both a supply chain and a channel of distribution, the primary aim should be to create maximum value for the customer.

Question 35

Just-in-time delivery reduces storing and handling costs for business customers.

Question 36

Electronic data interchange is important in business markets in the U.S., but it plays little role in international trade.

Question 37

In both supply chains and channels of distribution, the primary aim should be for each firm to keep its own costs as low as possible.

Question 38

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

Question 39

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

Question 40

The challenges of coordinating logistics functions in a supply chain has led to less sharing of information over the Internet and at Web sites.

Question 41

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

Question 42

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

Question 43

The best transporting mode is the one that provides the required level of service at the lowest cost.

Question 44

Although ships and barges are slow, they are the lowest cost method of freight transporting, and are useful when speed is not critical.

Question 45

Heavy, bulky goods requiring long distance movement are usually carried by railroads.

Question 46

Low transporting cost is not the only criterion for selecting the best mode of transportation.

Question 47

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

Question 48

Transport costs per pound for less-than-full carloads are less than for full loads.

Question 49

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

Question 50

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

Question 51

Goods that might become separated or damaged during transport can benefit from containerization in shipping.

Question 52

At least 75 percent of all U.S. freight moves, at least part of the way, by trucks.

Question 53

Private warehouses (compared to public warehouses) are most appropriate when a firm has a regular need to store a large quantity of goods.

Question 54

Storing makes goods available where they're needed.

Question 55

In the U.S., trucks carry more freight over more miles than any other mode of transportation.

Question 56

Transporting choices in developing countries are usually fewer in number, but cost more.

Question 57

Public warehouses (compared to private warehouses) provide greater economy and flexibility when a firm does not have a regular need to store a large volume of goods, but they provide fewer services than a firm's own warehouse could.

Question 58

Storing allows producers and intermediaries to keep stocks at convenient locations, ready to meet customers' needs.

Question 59

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

Question 60

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

Question 61

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

Question 62

Physical distribution decisions may impact

A) location decisions.
B) target market selection.
C) price decisions.
D) channel of distribution decisions.
E) all of the above.

Question 63

Logistics costs

A) are important to both firms and consumers.
B) don't vary from firm to firm.
C) are very similar across different countries.
D) total less than 10 percent of the cost of groceries.
E) have little impact on a macro marketing system.

Question 64

When both regrouping and storing are needed, a firm should add a distribution center.

Question 65

The physical distribution customer service level concerns

A) the costs to carry a product in inventory.
B) the length of time a product is stored in inventory.
C) the effort put in by channel members to meeting customer needs.
D) the location of distribution centers.
E) how rapidly and dependably a firm can deliver what customers want.

Question 66

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

Question 67

Most physical distribution decisions involve trade-offs between

A) the total cost of physical distribution and consumer service levels only.
B) transportation costs and inventory carrying costs only.
C) costs, consumer service levels, and sales.
D) sales and consumer service levels only.
E) availability and speed of delivery only.

Question 68

About what percentage of the cost of health care supplies in the U.S. are a result of logistics?

A) 15 percent
B) 20 percent
C) 25 percent
D) 33 percent
E) 40 percent

Question 69

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

Question 70

The physical distribution customer service level is important because:

A) it is a measure of how rapidly and dependably a firm delivers what its customers want.
B) it may result in lost sales if it is too low.
C) it may result in high costs (and thus lower profits) if it is too high.
D) All of the above.
E) None of the above.

Question 71

About what percentage of GDP do the developed economies in the U.S. and Europe spend on logistics-related costs?

A) 1-2 percent
B) 5-7 percent
C) 9-15 percent
D) 20-25 percent
E) 30-35 percent

Question 72

Logistics, or physical distribution, is the ________________ part of the marketing mix.

A) Possession
B) Placement
C) Production
D) Promotion
E) Product

Question 73

Physical distribution

A) should not require tradeoffs for managers.
B) means that consumers get products for low prices.
C) includes transportation of products, but logistics does not.
D) is invisible to most consumers in the United States.
E) All of the above are true.

Question 74

"Logistics" is concerned with:

A) reducing spatial separations between producers and consumers.
B) transporting, storing, and handling of physical goods along channel systems.
C) transporting, storing, and handling of physical goods within individual firms.
D) physical distribution.
E) All of the above.

Question 75

Physical distribution customer service level means all of the following EXCEPT:

A) Honda wants enough bumpers to build cars that day.
B) A vacationer wants Avis to have his rental car clean and ready when he arrives at the rental car counter.
C) Sears' shirts are priced at a fair value.
D) McDonald's has enough large cups so that customers can buy the larger size drinks which are on sale.
E) Safeway's loaves of bread are in stock -- and not crushed -- when customers want them.

Question 76

Logistics decisions include all of the following except:

A) distribution service level.
B) transporting of goods.
C) handling of goods.
D) prices to charge for delivery.
E) storage of goods.

Question 77

Physical distribution differs from logistics in that

A) logistics deals with storing and physical distribution does not.
B) logistics uses JIT to coordinate activities among firms and physical distribution does not.
C) logistics includes customer service decisions and physical distribution does not.
D) logistics includes transporting goods and physical distribution does not.
E) physical distribution is another common name for logistics.

Question 78

About what percentage of GDP do the developing economies in Latin America and Africa spend on logistics-related costs?

A) 10 percent
B) 20 percent
C) 30 percent
D) 40 percent
E) 50 percent

Question 79

The physical distribution ________________________ is how rapidly and dependably a firm can deliver merchandise in demand through the appropriate channels.

A) Product service level
B) Tradeoff service level
C) Customer service level
D) Standard service level
E) Efficiency service level

Question 80

A "distribution center" is a special kind of public warehouse designed specifically for storing perishable products.