What is value density and what is its impact on an organization's distribution policy?

What will be an ideal response?

The value of a product relative to its weight and volume is called its value density. Value density is an important variable in formulating distribution strategies. As a rule, the lower a product's value density, the more localized the distribution system. Most commodities, including cement, iron ore, and crude oil, have low value-density ratios–they're heavy but not particularly "valuable" if gauged in, say, shipping weight per cubic meter. Relative to their values, the cost of transporting these goods is high. Consequently, such products are processed or integrated into the manufacturing process at points close to their original locations. Products with high value density ratios include emeralds, semiconductors, and premium perfumes. Because the cost of transporting these products is small relative to their value, they can be processed or manufactured in the optimal location and then shipped to market. Because Johnson & Johnson's Vistakon contact lenses have high value density, the company produces and inventories its products in one U.S. location and serves the world market from there. When products need to be modified for local markets, companies can design their distribution systems accordingly.