Chapter 4 Flashcards
What are the two main cost factors that affect distribution network design?
Inventory costs
How does the number of facilities impact total logistics costs?
More facilities increase inventory & facility costs but reduce outbound transportation costs. Fewer facilities do the opposite.
What are the advantages of drop shipping?
Low inventory costs
What are the disadvantages of drop shipping?
High transportation costs
How does last-mile delivery compare to carrier delivery in terms of transportation costs?
Last-mile delivery has the highest transportation costs due to lack of economies of scale.
Why do online sales have higher return rates than in-store sales?
Easier return processes
What are some key factors influencing distribution network design?
Response time
Why does Peapod require a $60 minimum order for grocery delivery?
To justify last-mile delivery costs
Which distribution model has the lowest transportation costs?
Retail storage with customer pickup (customers do the transportation).
What is the main disadvantage of in-transit merge?
Higher facility & handling costs due to merging process.
