The Major Disadvantage of In-Transit Merge Compared to Drop-Shipping Is

question 49

Multiple Choice

The major disadvantage of in-transit merge compared to drop-shipping is

• A) transportation costs are high because the average outbound distance to the end consumer is large and package carriers are used to shipping the product.
• B) response times tend to be large because the order has to be transmitted from the retailer to the manufacturer and shipping distances are on average longer from the manufacturer's centralized site.
• C) order tracking becomes harder to implement because it requires complete integration of information systems at both the retailer and the manufacturer.
• D) the additional effort during the merge itself.
• E) the handling of returns is likely to be difficult and more expensive, hurting customer satisfaction.

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Definitions:

Factory Overhead

Indirect manufacturing costs that cannot be directly attributed to specific units produced, such as utility costs, maintenance, and salaries of non-direct labor.

Activity-based Costing

A costing methodology that assigns costs to products or services based on the activities that go into making them, aiming to provide more accurate product costs.

Service Quality

The evaluation of how well a delivered service matches the customer's expectations, often a key factor in customer satisfaction and loyalty.

Factory Overhead

All manufacturing costs that are not directly associated with specific product units, including maintenance, utilities, and equipment depreciation.