Use This Information for Question That Refer to the United

question 124

Multiple Choice

Use this information for question 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:
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 level, even if that means some products will occasionally be out of stock, if 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.
In designing the right physical distribution system, United Tools should primarily focus on:
$\begin{array}{lrl}\text { Main feature of system: }&\text { Total Cost }&\text { Distribution Service Level }\\1.\text { Airfreight } & \$ 1,000,000 & 95 \text { percent } \\2.\text { Inland waterways } & \$ 300,000 & 60 \text { percent } \\3.\text { Trucks } & \$ 500,000 & 70 \text { percent } \\4.\text { Rail and regional } & \$ 650,000 & 80 \text { percent } \\\text { warehouses } & &\end{array}$

• A) the inventory level that its current warehouse can support.
• B) the lowest cost transportation method for each of its products.
• C) where customers store their inventory.
• D) the desired customer service level.
• E) the physical characteristics of each product.

---

Definitions:

Genital Stage

The final stage of Freud's psychosexual development, beginning in puberty, where the focus of libido is on mature sexual interests.

Interested

Having an attention or curiosity to learn more about something or to be engaged in a particular activity or subject.

Anal Stage

A phase in Freudian psychosexual development when children focus on bowel control and elimination, typically around ages 2 to 3.

Latency Stage

A period in Freudian psychosexual development occurring between ages six and puberty, where sexual urges and behaviors are suppressed while cognitive and social skills develop.