Final answer:
The physical distribution concept, also known as logistics, involves the management of the flow of goods from production to consumption. The desired customer service level affects logistics by influencing the level of service provided to customers. Balancing customer service levels with costs is important in logistics operations.
Step-by-step explanation:
The physical distribution concept, also known as logistics, refers to the management of the flow of goods from the point of production to the point of consumption. It involves activities such as transportation, warehousing, inventory management, packaging, and customer service. Logistics plays a crucial role in ensuring that the right products are delivered to the right place, at the right time, and in the right condition.
The desired customer service level affects logistics in terms of the level of service provided to customers. When a company aims to exceed customer service expectations, it may invest more in logistics to ensure faster delivery, better packaging, and higher order accuracy. This can enhance customer satisfaction and loyalty. However, exceeding customer service expectations may come at a higher cost for the company.
On the other hand, if a company fails to meet customer service expectations, it risks losing customers and damaging its reputation. This highlights the importance of balancing customer service levels with the costs involved in logistics operations.