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What is meant by the physical distribution of goods? Physical distribution includes some components for physically moving the goods from manufacturers to the customers. Explain these components.

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Physical distribution focuses on the efficient movement of products from its producers to their consumers through interrelated intermediaries or channels of distribution. These channels are associated with providing the right products in the right quantities in the right place at the right time. Components of physical distribution are :

(i) Transportation: Transportation is required to move raw materials and other resources for production and to move final products to the point of consumption. It adds value to the goods by moving them to a place where these are required. The modes of transportation are roadways, railways, airways, shipping, and pipelines. Decision parameters for considering transportation are costs of transportation, speed or delivery time, nature of the product, consumer demand etc.

(ii) Inventory: Inventory is a stock of goods that are held by an organisation to resolve demand and supply conflicts and attain economies in transportation. They are maintained for ensuring that there is no scarcity and no oversupply of products/services. Scarcity and oversupply both can cause price instabilities and speculation in the market.

(iii) Warehousing: Warehousing involves warehouses or facilities that hold or store the inventory. Warehouses are commercial buildings for storage if products used by producers, importers, exporters, wholesalers, transporters, customs, etc. Warehousing includes sorting goods in small containers; Storage warehouses where goods are held for a long time and; distribution centers that operate as a central location for fast movement of goods.

(iv) Order processing: Order processing is a workflow of the process that deals with fulfillment of customer orders for reducing the time between orders placed by a customer to receive the goods. Order processing involves an integrated network of customer systems which track customer's credit rating, monitor the stock of goods, check on orders issued in a warehouse, preparing invoices and updating inventory records.

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