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articles: Logistics cost, consumer demand, and retail establishment density


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  • Chaug-Ing Hsu

    (Department of Transportation Engineering and Management, National Chiao Tung University, 1001 Ta Hsueh Road, Hsinchu, Taiwan 30049, Republic of China)

  • I-Jin Tsai

    (Department of Transportation Engineering and Management, National Chiao Tung University, 1001 Ta Hsueh Road, Hsinchu, Taiwan 30049, Republic of China)

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    This 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 Info

    Article provided by Springer in its journal Papers in Regional Science.

    Volume (Year): 78 (1999)
    Issue (Month): 3 ()
    Pages: 243-263

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    Handle: RePEc:spr:presci:v:78:y:1999:i:3:p:243-263

    Note: Received: 3 October 1996
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    Keywords: Logistics cost; consumer demand; retail establishment density; terminal; demand-supply interaction;

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    Cited by:
    1. 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.
    2. 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.


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