Which of the following consequences is a result of shipping directly from the point of manufacture to the customer rather than through a distribution network?

Which of the following consequences is a result of shipping directly from the point of manufacture to the customer rather than through a distribution network?

A. Delivery lead times are consistent.

B. Risk pooling benefits are negated.

C. Distribution overhead is increased.

D. Order-fill rate is decreased.

View Answer

Answer: B

Explanation:

Context: Shipping directly from the point of manufacture to the customer eliminates the intermediate distribution network.

Options Breakdown:

A. Delivery lead times are consistent: Not necessarily true, as direct shipping can have variable lead times.

B. Risk pooling benefits are negated: Distribution centers pool inventory to reduce variability in demand and supply; direct shipping bypasses this advantage.

C. Distribution overhead is increased: Actually, distribution overhead is typically reduced with direct shipping.

D. Order-fill rate is decreased: Not necessarily true, as it depends on the efficiency of the direct shipping process.

Correct Answer Justification: Risk pooling helps manage demand variability and inventory levels more effectively; direct shipping bypasses distribution centers, thus negating these benefits.

Reference: Supply chain management textbooks and articles Research on direct shipping vs. distribution center logistics