| Course | MT434 Logistics and Distribution Management |
|---|---|
| Unit | Unit 8 |
| Paper type | Service tier proposal |
| Length | About 1,100 words, 7 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Business Administration |
| Updated | October 2026 |
Free sample paper for MT434 Unit 8
Fees Built From Cost to Serve: An MT434 Unit 8 Service Tier Proposal for a Rowing Machine Maker
[Student Name]
Purdue University Global
MT434: Logistics and Distribution Management
Unit 8 Service Tier Proposal
[Instructor Name]
[Date]
Petrie Rowing, its customer groups, delivery partner and every cost, fee and uptake projection are composite estimates; the sources cited are real.
Where the Current Options Stand
With the two-site network from Unit 4, a standard ground delivery from the nearer site costs Petrie about $106.80 a rower on average and arrives in two to five business days. It is free to the buyer and its cost is built into the rower's price. Expedited two-day delivery from the nearer site costs about $262, or $155.20 more than ground. Petrie charges $99 for it, so every expedited order loses about $56.20. About 9 percent of the 38,000 consumer orders, 3,420 a year, choose it, for a loss of about $192,204.
Segments by What Delay Costs the Customer
The tiers are built around what waiting, or a difficult delivery, costs each group, not around demographics. Most home buyers are content with ground and care more about a reliable date than a fast one; the Unit 6 review of complaints showed delivery speed was mentioned by about 3 percent of buyers. A smaller group wants the rower quickly, often as a gift, and will pay for it. A third group, many of them older buyers or people in apartments, struggle with a 68-pound carton and want it brought inside and assembled. Fitness studios lose class revenue every day a rower is out of service, so for them the cost of delay is in parts, not new machines.
Tier 1: Standard Ground
Standard ground stays free, because it is what most buyers choose and what the rower's price already covers. Its cost to serve is $106.80 on average, it arrives in two to five business days, and the change from today is the promise: Petrie will show a delivery date based on the buyer's region and the nearer site, rather than a single five-day promise for everyone.
Tier 2: Expedited Two-Day
Expedited delivery keeps its two-day promise but its fee rises from $99 to $189, covering its incremental cost of $155.20 and leaving $33.80. Higher fees reduce uptake; the proposal projects that the share choosing two-day falls from 9 to 6 percent, 2,280 orders a year. Contribution moves from a loss of about $192,204 to a gain of about $77,064.
Tier 3: Scheduled In-Home Delivery
A new tier brings the rower to a room of the buyer's choice on a scheduled date, assembles it and removes the packaging. The delivery partner charges $214 an order and assembly costs $45, $259 in all, which replaces the $106.80 ground delivery, so the incremental cost is $152.20. Priced at $179, the tier contributes $26.80 an order. Uptake is projected at 4 percent of orders, 1,520 a year, for about $40,736. The fee is higher than a competitor's assembly offer, but it is set from Petrie's cost, not copied from a rival's price.
The current $99 two-day option is proof that a fee copied from the market, with no cost beside it, can lose money on every order.
Tier 4: Studio Parts Plan
The 260 fitness studios that buy Petrie rowers get next-day parts shipping inside an annual service plan at $690 a studio, $179,400 a year. Studios order parts about seven times a year, and next-day parts shipping from the nearer site averages about $54, so the plan's delivery cost is about $98,280. The plan contributes about $81,120, and it gives studios what they value most: a broken rower back in service the next day.
The Tier Table in Totals
Across the four tiers, standard ground remains a cost built into the rower's price. The three priced tiers move from a loss of about $192,204 today to a contribution of about $198,920, a swing of about $391,124 a year.
Avoiding Double Counting
The totals count each order once, the discipline Rushton et al. (2022) recommend when service costs are compared across options. Buyers who move from expedited to ground or to in-home delivery are counted in their new tier, and the ground cost they would otherwise have incurred is credited against the in-home cost rather than counted as a saving elsewhere. The removed expedited loss and the new contributions are therefore not added on top of one another.
Demand Response and Risk
The projections depend on uptake. If expedited uptake falls to 4 percent rather than 6, its contribution falls to about $51,376; if it stays at 9 percent, it rises to about $115,596. If in-home uptake is 2 percent, that tier contributes about $20,368. Even in the weakest combination, with low uptake for both new fees, the priced tiers contribute well over $100,000 a year, against today's loss. Fisher (1997) argued that products and customers differ in what they need from a supply chain, and tiering lets one network serve different needs at prices that reflect their cost. The research Lim et al. (2018) reviewed on home delivery classifies offers by whether they sell speed, convenience or low cost, and the four tiers here are one of each plus a service plan.
How the Tiers Will Be Shown to Buyers
The checkout page will show the four options with their delivery dates and fees side by side, with standard ground selected by default. The expedited fee will be shown as a delivery charge rather than as part of the rower's price, so buyers who choose ground see no change. The in-home tier will be described by what it includes, a room of choice, assembly and packaging removal, rather than by speed, since its value is the work done, not the days saved. Studios will be offered the parts plan at the time of purchase and at renewal of their service contract.
What the Tiers Mean for Operations
Each tier changes the work at the sites. Expedited orders must be picked the same day, so the provider's same-day measure from Unit 7 applies to them first. In-home orders are handed to the delivery partner rather than the parcel carrier, which adds a pickup schedule at both sites. Parts plan orders for studios ship next day from stock that each site must hold, so a small parts inventory is added at Indianapolis.
Recommendation
Adopt the four tiers at the start of the next quarter, after the Indianapolis site is serving its regions, with the new fees shown at checkout alongside each tier's delivery date, and review uptake and contribution after three months.
References
Fisher, M. L. (1997). What is the right supply chain for your product? Harvard Business Review, 75(2), 105-116.
Lim, S. F. W., Jin, X., & Srai, J. S. (2018). Consumer-driven e-commerce: A literature review, design framework, and research agenda on last-mile logistics models. International Journal of Physical Distribution & Logistics Management, 48(3), 308-332. https://doi.org/10.1108/IJPDLM-02-2017-0081
Rushton, A., Croucher, P., & Baker, P. (2022). The handbook of logistics and distribution management (7th ed.). Kogan Page.
MT434 Unit 8 instructions, in plain terms
Unit 8 asks students to design delivery service tiers and price them. Instructors expect each tier's cost to serve built from the company's own costs, with the fee set against it, rather than prices copied from competitors. Customer groups should be defined by what delay or a difficult delivery costs them, not by demographics. Each tier needs a projected uptake, and raising a fee should come with a projected drop in demand. Contribution should be shown per order and in total, and the totals should avoid double counting when customers move between tiers. The proposal should test how sensitive the result is to uptake and explain how tiers will appear at checkout and what they change in operations. A tier table is the core exhibit.
Inside the MT434 Unit 8 example
Beginning with today's two options, the sample shows the loss on every expedited order. Segments are defined by what delay costs each group. Each tier then gets its own section with cost to serve, fee, uptake and contribution, under a highlighted line on the current fee copied from the market. A totals section reports the swing in contribution, and a section explains how the totals avoid counting an order twice, citing Rushton and colleagues. The sensitivity section tests weaker and stronger uptake, with Fisher on matching supply chains to customers and Lim and colleagues on last-mile offers. Sections describe how tiers appear at checkout and what each changes at the sites, and the recommendation sets a review point after three months.
Where the points sit in the MT434 Unit 8 rubric
Tier proposals often stumble at the first column, when prices are copied from competitors instead of built from cost to serve. A fee printed without its cost beside it cannot show whether a tier earns or loses, and the current $99 option is the proof. Segments defined by demographics rather than by what delay costs the customer tend to be marked as descriptive rather than analytic. Graders look for demand response, since raising a fee without projecting uptake overstates revenue. Credit goes to avoiding double counting as customers move between tiers. A sensitivity test on uptake shows the result is not fragile. Describing what tiers change in operations connects pricing to execution. A tier table with cost, fee, uptake and contribution columns anchors the proposal.
Common MT434 Unit 8 mistakes, and how to avoid them
The most common weak tier proposal lists competitors' delivery options and prices, then proposes similar ones. Another frequent error sets a fee without showing what the tier costs, so no one can tell whether it makes money. Students often raise a fee and assume the same number of customers will pay it. Contribution from customers who move from one tier to another is frequently counted twice. Segments are commonly described by age or income rather than by need. Before submitting, check each tier's row: cost to serve, fee, the difference and the projected number of orders. If any row lacks one of those four numbers, that tier's contribution is a guess rather than an estimate.
Get an MT434 Unit 8 example written to your instructions
Customer groups, delivery costs and current fees, as given in the Unit 8 materials, are what the proposal needs, together with your rubric. Expect a composite that prices each tier from its cost to serve, projects uptake and states what the slowest tier gives up. We write the first custom sample at no cost, delivered in 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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MT434 Unit 8 questions, answered
How many tiers should a service tier proposal include?
Usually three or four. Fewer rarely separates customers who value speed from those who do not, and more becomes hard to explain at checkout. What matters most is that each tier matches a group with a distinct need and that its price covers its cost. Your case may define the segments already; if so, build the tiers around them.
Should faster tiers make a profit or just break even?
Either can be defended. Some companies price a premium tier to earn margin, while others price it near cost to win or keep customers. The paper should say which approach it takes and why. What instructors tend to question is a fast tier priced below its cost with no argument about what the loss is buying.
How can I estimate how many customers will choose each tier?
Begin from anything the case gives, such as current uptake of an existing upgrade, then adjust for the price change with a stated assumption. A higher fee usually lowers uptake. A short sensitivity check at a higher and a lower uptake shows the reader whether the recommendation depends heavily on that guess.
Where can I find a free MT434 Unit 8 sample paper?
This page holds the full MT434 Unit 8 proposal, building four rowing machine delivery tiers from cost to serve with projected uptake.
Why does the MT434 Unit 8 sample raise the two-day fee to $189?
Two-day delivery costs about $155 more than ground from the nearer site, so the current $99 fee loses about $56 on every order.