Embedding Economies of Scale Concepts in the Model of Optimal Locations of Fresh Produce Aggregation Hubs

Houtian Ge, Patrick Canning, Stephan Goetz, Agnes Perez and Jie Li

Agricultural and Resource Economics Review, 2019, vol. 48, issue 3, 365-387

Abstract: Food hubs are of interest in regional and local food system development because they potentially enhance the sustainability of food supply chains. Expanding on earlier literature, this study introduces economies of scale into an aggregation hub location model and disaggregates production into four seasons to account for geographic and seasonal variation of US fresh produce production. A mixed integer linear programming model is formulated with the objective of minimizing total costs of assembly and first-handler operations. Results suggest scale economies have significant effects on the optimal number, locations, and sizes of aggregation hubs. We model regional and local food systems in a manner more consistent with economic theory and provide a richer framework for policy analysis.

Date: 2019
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