D&F is a distributor of CDs and cassettes that offers benefits such as discount prices and an
Question:
D&F is a distributor of CDs and cassettes that offers benefits such as discount prices and an introductory offer of 10 CDs or cassettes for a penny (not including the shipping and handling costs). Its primary target customers are college students; its main marketing strategy is constant deals to club members. The company's main competitors in the industry are BMG and Columbia House; both offer similar promotions. D&F started in 1993 with an office in Harrisburg, Pennsylvania, initially targeting college students in the surrounding area. The company realized there was a high demand for discounted music merchan- dise and the convenience of delivery by mail within universities. After its second year, with a constant increase in customer orders, D&F relocated to Philadelphia because it was located near more colleges and universities. The move has had a positive effect on net profits and demand, supporting the decision to continue the growth of the company. D&F recently expanded its facility to be able to fulfill a higher demand for its services. Its customer base ranges from areas as close as Villanova University to as far as Boston College. As of 2003, there were 103 employees. Their prior year's gross sales were $125 million. D&F's market share is on the rise, but is not yet comparable to the magnitude of BMG and Columbia House. However, the corporation's goals for the upcoming years include establishing itself as an industry player through increased customer satisfaction and loyalty. D&F is also considering the installation of a new information processing system. This system will reengineer their current business functions by reducing loopholes in their internal control problems. D&F receives CDs and cassettes from various wholesale suppliers and music store chains, totaling 32 suppliers nationwide. The office has its own warehouse, stores its own merchandise, and is responsible for replenishing the inventory. D&F has had no substantial problems in the past with their suppliers. On the other hand, it has encountered problems with excess inventory, stock outs, and discrepancies with inventory records.
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