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The significance of these costs that occur as a re

The significance of these costs that occur as a result of servicing customers can be profound in terms of how logistics strategies should be developed. Firstly, customer profitability analysis will often reveal a proportion of customers who make a negative contribution, as in Figure below. The reason for this is very simply that the costs of servicing a customer can vary considerably even between two customers who may make equivalent purchases from us.https://d2vlcm61l7u1fs.cloudfront.net/media%2Ff4e%2Ff4eb93d1-02d8-4dac-bc5f-642a339247fb%2FphpABNgXk.pngQuestion:Consider the last 15% of customers in the Figure above. How should the suppliers of such firms respond to this condition?

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