Management Notes

Reference Notes for Management

Three criteria for designing distribution networks to meet customer expectations are:

Three criteria for designing distribution networks to meet customer expectations are:


A. rapid response, service, and cost
B. rapid response, product choice, and service
C. product choice, cost, and service
D. cost, process choice, and service
E. rapid response, cost, and process choice

The Correct Answer Is:

B. rapid response, product choice, and service

Correct Answer Explanation: B. rapid response, product choice, and service.

Designing distribution networks is a critical aspect of supply chain management, as it directly impacts a company’s ability to meet customer expectations. The three criteria mentioned in option B are crucial for achieving this goal.

i. Rapid Response:

Rapid response refers to the speed at which a company can fulfill customer orders. In today’s fast-paced business environment, customers expect quick delivery times. This criterion ensures that products are delivered to customers in a timely manner, minimizing lead times and increasing customer satisfaction.

A distribution network with efficient transportation and warehousing processes is essential for achieving rapid response.

ii. Product Choice:

Offering a wide range of products allows a company to cater to diverse customer preferences and needs. A well-designed distribution network should be capable of handling a variety of products efficiently.

This includes considerations for storage, handling, and transportation of different types of goods, such as perishables, fragile items, or oversized products. By providing a broad product selection, a company can attract a larger customer base and retain existing customers.

iii. Service:

Excellent customer service is a cornerstone of any successful business. It encompasses various elements, including responsiveness to customer inquiries, effective communication, and a commitment to resolving any issues that may arise.

A distribution network that prioritizes customer service ensures that customers have a positive experience throughout the purchasing process. This can lead to higher customer loyalty, positive word-of-mouth, and ultimately, increased sales.

Now, let’s analyze why the other options are not correct:

A. Rapid response, service, and cost:

This option acknowledges the importance of rapid response and service, which are indeed crucial aspects of designing distribution networks. However, it falls short by not including product choice as one of the key criteria.

Product choice is vital because it allows a company to cater to a diverse customer base with varying preferences and needs.

Additionally, cost is an important consideration, but it should not be the sole focus. Overemphasizing cost may lead to compromises in other critical areas such as service quality or product availability.

C. Product choice, cost, and service:

This option correctly identifies two important criteria: product choice and service. Offering a variety of products and providing excellent customer service are key elements in meeting customer expectations. However, it neglects to include rapid response as a criterion.

In today’s fast-paced business environment, customers have high expectations for quick delivery times. Ignoring rapid response may result in delays and dissatisfied customers.

D. Cost, process choice, and service:

This option places a strong emphasis on cost and process choice, which are certainly relevant factors in designing distribution networks. Controlling costs and optimizing processes are essential for a company’s profitability and efficiency.

However, this option neglects the critical elements of rapid response and product choice. Rapid response ensures timely delivery to customers, which is a significant factor in customer satisfaction. Moreover, process choice may be more specific to internal operations and may not directly impact customer expectations.

E. Rapid response, cost, and process choice:

This option gives weight to rapid response and cost, which are indeed crucial considerations. Rapid response ensures that a company can meet the expectations of customers who demand quick delivery times. Cost management is also vital for maintaining competitiveness and profitability.

However, this option overlooks the importance of product choice and service. Product choice is essential for attracting and retaining customers with diverse preferences, and service is a cornerstone of building strong customer relationships.

In summary, while the options A, C, D, and E each highlight certain important aspects of distribution network design, they fall short by omitting or undervaluing other crucial criteria.

Option B, on the other hand, provides a balanced and comprehensive set of criteria, including rapid response, product choice, and service, which collectively ensure that a company’s distribution network is well-equipped to meet customer expectations effectively. 

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