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

Chaug-Ing Hsu () and I-Jin Tsai ()
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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

Papers in Regional Science, 1999, vol. 78, issue 3, 243-263

Abstract: 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.

Keywords: Logistics cost; consumer demand; retail establishment density; terminal; demand-supply interaction (search for similar items in EconPapers)
JEL-codes: R41 (search for similar items in EconPapers)
Date: 1999-07-28
Note: Received: 3 October 1996
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Citations: View citations in EconPapers (3)

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