The main constituents of Physical Distribution cost are:
PDC = T + W + S
Where PDC = Total Physical Distribution cost
T = Total Transportation Cost
W = Total Warehousing Cost
S = Total cost of the sales lost due to the non availability of product at the right time .
When a firm runs out of Stock, customers can Permanently Switch to a new Seller for all purchases Switch to new Seller while Merchandise Is not available Purchase a Substitute Product from The same seller Wait until Merchandise is available Most desirable action Least Desirable Action What happens when a firm has stock shortages