Explain briefly the components of physical distribution.
Or
Physical distribution includes some components for physically moving the goods from manufacturers to the customers. Explain these components.

In Physical Distribution of products four activities are included and decisions related to these activities are taken. These four activities are as follows:

(i) Transportation: Transportation is that activity through which products are moved from one place to another. By making the products reach at desirable place increases the importance and value of those products. Many means of transportation are available, like — road, railway, air, water, pipeline etc.

(ii) Inventory: By inventory we mean the stock of raw material, semi-finished goods and finished goods held in anticipation of sales or use. How much inventory should be kept for various items? This is an important decision in Physical Distribution. The main reason why this decision is important is that if the inventory is either more or less than required, both the situations have their advantages and limitations.

(iii) Warehousing: Oftenly it is noticed that it takes some time between purchasing/ manufacturing and selling. For this time period material has to be kept in stock. Under warehousing activity following decisions regarding the inventory of material are taken:

(a) Which is a better option? (To own or to rent a warehouse)

(b) Which is the right location for a warehouse? (Nearer to factory or nearer to market).

(c) Which decision is more apposite? (To locate the warehouse at one place or at different places)

(iv) Order Processing: Order Processing means the process which is followed to fulfill the material order of the customer. Different steps of an order processing are as follows:

(a) Orders placed by consumers to salesperson.

(b) Transmission of order by salesperson to company.

(c) Entry of order in Company Office.

(d) Evaluate the reputation of customer.

(e) Check inventory and prepare scheduling.

(f) Shipment of material in accordance to the order.

(g) Receive Payment.