Physical Distribution and Supply

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Questions and Answers

What is the primary reason why manufacturers extend their market?

To gain economies of scale in manufacturing and improve profitability (correct)

To localization of their production

To reduce the quality of their products

To restrict their potential for growth and profit

What does manufacturing add to a product?

Emotional value

Form value (correct)

Social value

Place value and time value

What is the primary purpose of distribution?

To reduce the quality of a product

To increase the price of a product

To add form value to a product

To add place value and time value to a product (correct)

What is an example of a channel of distribution?

Producer to wholesaler to retailer to consumer (C) Signup and view all the answers

Why do market characteristics influence the logistics system?

Because they affect the location of distribution centers (C) Signup and view all the answers

What are the two main functions of material movement?

Physical supply and physical distribution (C) Signup and view all the answers

What is an example of a product characteristic that affects logistics?

Weight (C) Signup and view all the answers

Who is responsible for the physical distribution of goods?

The distribution department (D) Signup and view all the answers

What is the primary function of the transaction channel?

To negotiate, sell, and contract (D) Signup and view all the answers

Why does a florist selling a perishable product use their own trucks?

Because the product is perishable and needs to be delivered locally (D) Signup and view all the answers

What is the difference between moving iron ore and moving sheet steel?

The logistics problems are different (A) Signup and view all the answers

What is an example of an intermediary in the channel of distribution?

A wholesaler (C) Signup and view all the answers

What is the main difference between physical supply and physical distribution?

The bulk and physical condition of raw materials and finished goods (B) Signup and view all the answers

What is the channel of distribution?

The route taken by goods from the producer to the consumer (C) Signup and view all the answers

Who may pay for the cost of physical supply, depending on the conditions of sale?

Either the supplier or the customer (A) Signup and view all the answers

What is the primary function of the distribution channel?

To transport goods from the producer to the consumer (D) Signup and view all the answers

Study Notes

Physical Distribution

Physical distribution is the movement and storage of finished goods from the end of production to the customer.
It involves the movement of materials from the producer to the consumer through distribution centers, wholesalers, and retailers.
The path in which the goods move is called the channel of distribution.

Channels of Distribution

A channel of distribution is one or more companies or individuals who participate in the flow of goods and/or services from the producer to the final user or consumer.
Intermediaries are companies or individuals who distribute some or all of a company's products to the final consumer.
Examples of intermediaries include wholesalers, agents, transportation companies, and warehousers.

Transaction and Distribution Channels

The transaction channel is concerned with the transfer of ownership, negotiating, selling, and contracting.
The distribution channel is concerned with the transfer or delivery of the goods or services.
The same intermediary may perform both functions, but not necessarily.

Physical Distribution vs. Physical Supply

Physical supply is the movement and storage of goods from suppliers to manufacturing.
Physical distribution and physical supply have different logistics problems, particularly in terms of bulk and physical condition of raw materials and finished goods.

Importance of Physical Distribution

Physical distribution is vital in our lives, as it allows manufacturers to extend their market and gain economies of scale in manufacturing.
A well-run distribution system is necessary to extend markets, reduce the cost of purchases, and improve profitability.
Distribution adds place value and time value by placing goods in markets where they are available to the consumer at the time they want them.

Factors Affecting Physical Distribution

The channels of distribution used by the firm.
The types of markets served.
Market characteristics, such as geographic dispersion, number of customers, and size of orders.
Product characteristics, such as weight, density, fragility, and perishability.
The type of transportation available to move the material.