Order Management and Customer Service
1. Explain how order management and customer service are related.
2. What is the role of activity-based costing in customer relationship management? In customer segmentation?
3. Explain the impacts of order cycle time length and variability on both buyers and
4. Discuss the nature and importance of the four logistics-related elements of customer service.
5. Assume an organization’s current service level on order fill is as follows:
Current order fill = 80% Number of orders per year = 5,000 Percentage of unfilled orders back-ordered = 70% Percentage of unfilled orders cancelled = 30% Back order costs per order = $150 Lost pretax profit per cancelled order = $12,500
a. What is the lost cash flow to the seller at this 80 percent service level? b. What would be the resulting increase in cash flow if the seller improved order fill to
92 percent? c. If the seller invested $2 million to produce this increased service level, would the
investment be justified financially?