The Cleanco Chemical Company sells cleaning compounds (dishwashing powders, floor cleaners, nonpetroleum lubricants) in a keenly competitive environment to restaurants, hospitals, and schools. Delivery time on orders determines whether a sale can be made. The distribution system can be designed to provide different average levels of delivery time through the number and location of warehousing points, stocking levels, and order processing procedures. The physical distribution manager has made the following

a. What level of service should the company offer?
b. What effect would competition likely have on the service level decision?

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Percentage of Orders Delivered Within One Day 50 60 080 90 5 100 Estimated annual sales (millions of $) 40 8.0 10.10 511.8,12.0 7.0 8.1 9.0 14.0 Cost of distribution (millions of $) 5.8 6.06.