articles: Logistics cost, consumer demand, and retail establishment density
AbstractThis article develops models to formulate the optimal density of retail establishments by considering interactions between logistics cost and consumer demand. Commodities are assumed to be distributed from a depot directly or through single intermediate terminal to many retail establishments. Average logistic cost per item, consumer demand, and the interrelationship between them are analyzed. The optimal density of retail establishments and local terminals are determined by minimizing average logistic cost, or maximizing total supply subject to the demand-supply equality. The envelope curves for the optimal configuration strategies corresponding to different values of total market area and terminal cost are derived.
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Bibliographic InfoArticle provided by Springer in its journal Papers in Regional Science.
Volume (Year): 78 (1999)
Issue (Month): 3 ()
Note: Received: 3 October 1996
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- R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion
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- Marco Alderighi & Claudio A. Piga, 2007.
"Why Should a Firm Choose to Limit the Size of its Market Area?,"
Discussion Paper Series
2007_21, Department of Economics, Loughborough University, revised Aug 2007.
- Alderighi, Marco & Piga, Claudio A., 2008. "Why should a firm choose to limit the size of its market area?," Regional Science and Urban Economics, Elsevier, vol. 38(2), pages 191-201, March.
- Turkensteen, Marcel & Klose, Andreas, 2012. "Demand dispersion and logistics costs in one-to-many distribution systems," European Journal of Operational Research, Elsevier, vol. 223(2), pages 499-507.
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