Modelling the Sales-Service Relationship

Two Points Method

• Involves establishing two points on the diminishing return portion of the sales-service relationship through which a straight line can be drawn. 
• Involves setting logistics customer service at high level for a particular product and observed the sales that can be drawn. 
• Then the level is reduced to low level and sales are again noted. 

Before-After Experiments

• These types are subject to the same methodology problems as the two points method. 
• These experiments may be easier to implement because the current service level serves as the before data point. Only the "after" data point is then needed. 

Game Playing

• One approach is to set up a laboratory simulation, or gaming situation, participants make their decisions within a controlled environment. 
• The environment attempts to replicate the elements of demand uncertainty, competition, logistics strategy, and others that relevant to the situations. 
• Extensive data can be obtained to generate a sales-service curve. 

Buyer Surveys

• Mail questionnaire and personal interview frequently used because a large sample of information can be obtained at relatively low cost. 
• Some questions are designed to determine how buyers would change their patronage or purchase level among supplier if customer service changed. 
• The questions must be carefully designed so as not to lead the respondents or to bias their answers and yet capture the essance of service that the buyers find important.