Collection of demand related factors under the

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collection of demand-related factors under the control of the firm, but whose important in determining supplier patronage is ultimately evaluated by customer receiving the service. (Ronald H. Ballow, Business Logistics Management, Prentice Hall, Englewood (Iiffs, N.J. 1973). Five major factors affect customer service : time, dependability, communication, availability and convenience. 4.2. Measure Customers Service Several possible measures of customer service are shown in Fig. 1. Fig. 1. Possible Measures of Customer Service Performance Source : Douglas M. Lambert and James R. Stock, Strategic Distribution Management (Homewood, III: Richard D. Irwin, 1982), p. 75. The choice of an appropriate measure or measures is situation specific and is based on the service factor(s) most closely linked to customer satisfaction. The pretransaction elements use measures that designate service capability before it is provided. A target delivery date indicates the planned time of delivery. The transaction elements gauge service performance for various components of buyer- seller transactions. The post-transaction elements measure customer service based on results or outcomes. Establishing communications between buyers and sellers is an important factor in customer service. Inventory availability Target delivery dates Order status Order tracing Backorder status Shipment shortage Shipment delays Product substitutions Routing change Actual delivery dates Return adjustments Pretransaction elements Transaction elements Posttransaction elements Customer service Annamalai University
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188 4.3. Examine Cost Trade-offs Trade-off analysis in PDS design is the evaluation of the costs of each system component with the objective of determining the combination of components that provides a minimum total cost system for a specified customer service level. The inter-relationships of various PDS components are shown in Fig.2. The arrows indicate the trade-offs between activities that must be evaluated in: Estimating customer service levels Developing purchasing policies Selecting transportation policies Making warehousing decisions Setting inventory levels Fig. 2. Cost Trade-offs in a Physical Distribution System Product Price Promotion Place customer service levels (cost of lost sales ) Inventory carrying costs Transportation costs Production lot quality costs Order processing and information costs Warehousing costs (through costs not storage) Marketing Physical distribution Annamalai University
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189 Since certain elements of the distribution function are often more important than others in a given firm, trade-off analysis should be directed to those elements that comprise the major portion of distribution costs. 4.4. Identify and Select Design Alternatives A key issue in designing the PDS is how to incorporate the customer service objective into the design process. Management judgement and experience will often dictate a range of customer satisfaction levels that are acceptable to the firm. In
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