Podcast
Questions and Answers
What is a significant benefit of establishing warehouses for a manufacturer?
What is a significant benefit of establishing warehouses for a manufacturer?
What can occur if too many distribution centers (DCs) are built?
What can occur if too many distribution centers (DCs) are built?
How does the addition of more distribution centers typically affect inventory carrying costs?
How does the addition of more distribution centers typically affect inventory carrying costs?
What is a common fulfillment strategy for managing items of different velocities?
What is a common fulfillment strategy for managing items of different velocities?
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What is a tradeoff when considering distribution operations and customer service?
What is a tradeoff when considering distribution operations and customer service?
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Why is it challenging to adopt a risk pooling strategy with decentralized inventory?
Why is it challenging to adopt a risk pooling strategy with decentralized inventory?
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What is one consequence of maintaining a centralized facility for low-velocity items?
What is one consequence of maintaining a centralized facility for low-velocity items?
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What factor can influence the comfort level of buyers regarding a supplier's DC location?
What factor can influence the comfort level of buyers regarding a supplier's DC location?
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What is the primary tradeoff when considering space within a distribution facility?
What is the primary tradeoff when considering space within a distribution facility?
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How does increased automation in a distribution facility affect labor requirements?
How does increased automation in a distribution facility affect labor requirements?
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What relationship exists between the number of people employed and the size of the distribution facility?
What relationship exists between the number of people employed and the size of the distribution facility?
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What tradeoff should be considered when aiming for internal efficiency in a distribution operation?
What tradeoff should be considered when aiming for internal efficiency in a distribution operation?
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Which factor allows distribution managers to handle demand surges effectively?
Which factor allows distribution managers to handle demand surges effectively?
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What is a benefit of proper equipment use in a distribution facility?
What is a benefit of proper equipment use in a distribution facility?
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What would likely happen if a distribution facility relies entirely on manual operations?
What would likely happen if a distribution facility relies entirely on manual operations?
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What impact does having a small workforce have on facility operations?
What impact does having a small workforce have on facility operations?
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Study Notes
Supply Chain Distribution Tradeoffs
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Distribution vs. Transportation: Direct shipping from plants to customers is costly. Warehouses (DCs) reduce costs by allowing large shipments to distant facilities and smaller deliveries to customers. However, too many DCs decrease efficiency, leading to less-than-truckload shipments and higher transportation expense.
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Distribution vs. Inventory: More DCs mean higher inventory carrying costs. Inventory increases with the addition of facilities, but at a decreasing rate. Decentralized inventory hinders risk pooling strategies as each facility needs safety stock.
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Regional vs. Centralized Facilities: Firms often use regional facilities for high-velocity items and a central facility for slow-moving items (e.g., replacement parts, costly products). Centralized inventory reduces carrying costs despite longer delivery distances.
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Distribution vs. Customer Service: More facilities improve customer service—buyers prefer DCs within a day's drive. However, this is balanced against the higher costs of operating additional facilities and carrying inventory.
Facility-Level Tradeoffs
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Space vs. Equipment: Larger facilities benefit from automation and materials handling. Proper equipment leverages vertical space and speeds up product flow.
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Equipment vs. People: Automation reduces labor needs. Manual operations require more people for distribution activities.
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People vs. Space: Larger workforces allow for larger facilities and higher throughput. Small teams need more automation in large facilities to efficiently serve customers.
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Resource tradeoffs: Financial and performance tradeoffs are necessary for internal efficiency. Efficient use of resources like space, equipment, and people is critical to meeting distribution goals.
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Description
Explore the complexities of supply chain distribution tradeoffs in this quiz. Understand the balance between distribution costs, inventory management, and customer service levels. Learn how the choice of centralized versus regional facilities impacts efficiency and service quality.
