Use This Information for Questions That Refer to the United

question 12

Multiple Choice

Use this information for questions that refer to the United Tools case. Terry Harter is marketing manager for United Tools,and Mike O'Reilly is the firm's logistics manager.They work together to make decisions about how to get United's hand and power tools to its customers-a mix of manufacturing plants and final consumers (who buy United tools at a hardware store) .United Tools does not own its own transport facilities,and it works with wholesalers to reach its business customers.
Together,Harter and O'Reilly try to coordinate transporting,storing,and product-handling activities to minimize cost while still achieving the customer service level their customers and intermediaries want.This usually requires that United keep an inventory of most of its products on hand; but demand for its products is fairly consistent over time,so inventory is easy to manage.
Harter has identified four options for physical distribution systems she could use to reach two of her key wholesalers,Ralston Supply and Ricotta Tool Co.The total cost for each option-and the distribution service levels that can be achieved-are as follows:
$\begin{array}{c}\begin{array}{lll}\\1.\\2.\\3.\\4.\\\\\end{array}\begin{array}{lll}\text{Main feature of system:}\\Airfreight\\Inland ~waterways\\Trucks\\Rail ~and ~regional\\warehouses\\\end{array}\begin{array}{lll}\begin{array}{rc}\text { Total Cost}&\text { Distribution Service Level }\\\$ 1,000,000 & 95 \text { percent } \\\$ 300,000 & 60 \text { percent } \\\$ 500,000 & 70 \text { percent } \\\$ 650,000 & 80 \text { percent }\\\\\end{array}\end{array}\end{array}$
Ralston Supply expects a very high level (90 percent) of distribution customer service.Ricotta Tool Co.is willing to settle for a 70 percent customer service -leveleven if that means some products will occasionally be out of -stockif it gets products at a lower price.
For its large retail hardware customers (like Home Depot) ,United regularly ships smaller orders directly to individual stores or in some cases to the retail chain's warehouses.Cross-country shipments usually go by rail,while regional shipments usually go by truck.
United's shipments to international markets often rely on containerization.The likely reason for this is that

• A)the tools are shipped by airfreight.
• B)it makes it easier to move shipments between different transportation modes.
• C)containerization is very useful for small,frequent shipments.
• D)containerization allows a firm to carry less inventory.
• E)All of these are good reasons for relying on containerization.

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Definitions:

Behavior

The actions or reactions of an individual or group in response to external or internal stimuli.

Determinism

Determinism is the philosophical belief that all events, including moral choices, are determined completely by previously existing causes.

Unpredictable

Describes something that is not able to be predicted or anticipated due to its random or variable nature.

Heredity

The genetic transmission of characteristics from parents to offspring, influencing various aspects of an individual's physical and behavioral traits.