Chapter 10.docx

Chapter 10.docx - goods. The significance of the difference...

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4/8/08 Chapter 10 – production and channel systems - Channels refer to people - Physical distribution refers to the means that the product is moved and has 5 factors to it o The location of Production facility (try to locate near raw materials). Ex most car companies in the 60s were in Detroit due to the fact that it was close to many steel mills and was located near the great lakes which made it easy to transport raw materials. Also think about the cost of the development site, living, the cost of working and other requirements for locals. o The location of the Warehouse facility – Back then the warehouses would be close to the customers, but now most products are easier to transport. What are the encouragements or discouragements for your facility? o Inventory policies – how much inventory, raw materials, and finished
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Unformatted text preview: goods. The significance of the difference between raw materials and finished goods is that once labor is added to raw materials can dramatically change the cost to finished goods. o Packaging Relates to shrinkage (loss to theft and lost merchandise and damage). Different kinds of packaging can help to reduce shrinkage. Bubble wrapping. FOB is free on board. o Freight Decisions 6 ways to ship a product in order of efficiency Electronic Pipeline Water good for heavy stuff Rail good for heavy stuff. Ground Very expensive Air o Decision fork when you have to make a decision. Its the box on the decision tree. o Event fork making more decisions. The circles on the decision tree....
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Chapter 10.docx - goods. The significance of the difference...

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