Final answer:
A decline in demand for traditional postal services, indicated by a leftward shift in the demand curve from Do to D1, represents a negative effect due to the increasing preference for digital messages over snail mail.
Step-by-step explanation:
Factors Affecting Physical Distribution Service Levels
Analyzing the impact on physical distribution service levels involves understanding how various factors influence the distribution, management, and creation of key resources. These factors ultimately affect the movement of products, money, and people as well as their availability in different locations. Let's explore the example provided to understand the effects on supply and demand.
Effect on Demand for Postal Services
The scenario presented indicates a shift in consumer preferences from traditional mail (snail mail) to digital communication methods. This shift leads to a negative effect on the demand for postal services. As tastes move toward digital messages, the quantity of postal services demanded at any given price decreases, hence the demand curve for postal services shifts to the left, from Do to D1.
This change exemplifies how modifications in consumer preferences can significantly alter service levels in the physical distribution channels. Companies that rely on postal services must adapt to these changing demands to maintain their relevance and service efficiency.