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Physical Distributions

Multi Warehouse System

We want to know what happens to the service level as more distribution centers are added to the system. To make valid comparisons, we must freeze the sales volume. We can then compare the costs as we add distribution centers to the system.

Transportation costs
Generally, as more distribution centers are added to a system, we expect the following:

Transportation Costs

In a physical distribution system, transportation function is concerned with the movement of goods from the factory to the end customer through a number of intermediaries.

In a typical distribution setup, the finished goods are shipped to the factory warehouse, from the factory warehouse, the goods are shipped to the distribution warehouses, from the distribution warehouses the goods are sent to local storage. From the local storage, the goods are sent to the final customers.

Materials Handling & Packaging

Typically, distribution warehouses perform the activities of receiving, shipping and storing large number of goods on a continuous basis. This demands large amounts of internal movement of goods, loading and unloading activities and good storage mechanism within the warehouse.

Material handling is responsible for :


Warehouses provide a place to store , handle and protect goods. They form an integral part of the business functions of an organization and contribute to the competitive advantage of a company by improving customer service levels and reducing transportation costs.Warehouses include plant warehouses, regional warehouses and local warehouses. They may be owned and operated by the supplier or intermediaries such
as wholesalers, or may be public warehouses.


Transport or transportation is the movement of people, cattle, animals and goods from one location to another.Transport is important since it enables trade between peoples, which in turn establishes civilizations.

By making a product available at a particular point in the distribution system, it adds place value to the product. On a broader perspective, transportation contributes to the social and economic development.

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