A Merchant Wholesaler Is Considering Four Physical Distribution Systems and Estimates

question 207

Multiple Choice

A merchant wholesaler is considering four physical distribution systems and estimates the total cost and customer service level for each as follows: The best alternative is:

• A) truck.
• B) airfreight.
• C) rail and warehouse.
• D) inland waterways.
• E) Cannot be determined without knowing how the target customers feel about the customer service level.

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Definitions:

Minimize The Cost

A strategy aimed at finding the most effective way to use resources to reduce expenses to the lowest possible level.

Cost Per Unit

The total cost associated with producing one unit of a product, including fixed and variable costs.

Economic Profit

The disparity between what a company earns in total and what it spends, counting both direct and indirect costs.

Self-Interest

The motivation driving individuals to pursue their own benefits or advantages, often considered a fundamental economic assumption.