The significance of these costs that occur as a result of servicing customers ca
ID: 382425 • Letter: T
Question
The significance of these costs that occur as a result of servicing customers can
be profound in terms of how logistics strategies should be developed. Firstly,
customer profitability analysis will often reveal a proportion of customers who
make a negative contribution, as in Figure below. The reason for this is very
simply that the costs of servicing a customer can vary considerably – even
between two customers who may make equivalent purchases from us.
Question:
Consider the last 15% of customers in the Figure above. How should the suppliers of such firms respond to this condition?
110 90 70 E 60 o 50 E 40 30 20 - 10 H 3 0 10 20 30 40 50 60 70 80 90 100 cumulative customers (%)Explanation / Answer
After going through the given graph and analyzing the condition, In my opinion the suppliers of such firms must respond to this condition as follows:
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