Question

How does the number of steps in the distribution process affect the final cost to the customer?

Answer 1

The More the Number of steps in the distribution process, the more will be the cost to the customer because,

• The Cost incurred at each step be charged to customer ultimately.
• The Waiting time to deliver the product will be more when there are more steps in distribution process. Thus leading to Holding cost of Inventory be charged to the customer.
• The more the steps, the more no. of employees(or machines) at each step. Thus resulting in a more Employee cost or depreciation cost chargeable to cost.

The Number of steps in Distribution process should be reasonable but should not be more.