Question

When you receive an order and don't have the product in stock, what are your options?

a) ship from a more-distant DC, incurring higher shipping costs
b) wait for the product to be delivered from a supplier, and then ship the order
c) fill a partial order with existing inventory, which increases handling costs
d) drop ship directly from the factory
e) all of the above
f) only b, c, and d

Answer 1

Your options when an order is received and the product is not in stock include shipping from a more-distant DC, waiting for product delivery from a supplier, filling a partial order, or drop shipping directly from the factory, with each option affecting costs and efficiency differently.

Step-by-step explanation:

When you receive an order and don't have the product in stock, your options include:

• Shipping from a more-distant Distribution Center (DC), which may incur higher shipping costs due to factors like congested street networks or jammed freeways.
• Waiting for the product to be delivered from a supplier before shipping it to the customer, which can lead to delays.
• Filling a partial order with existing inventory, which may increase handling costs due to additional shipments when the unavailable items arrive.
• Drop shipping directly from the factory, avoiding inventory handling but potentially incurring costs depending on the factory's location and shipping methods.

Each of these options have different implications for cost and customer satisfaction. Proximity to uncrowded freeways and having access to alternative transport methods like rail or water can influence the cost-effectiveness of these options. Leaders in logistics and supply chain management often have to consider these factors when deciding on the best course of action.