Quality control of Dutch custard balanced against recall costs

Annet G.J. Velthuis, M.W. Reij and Coen P.A. van Wagenberg

No 58133, 113th Seminar, September 3-6, 2009, Chania, Crete, Greece from European Association of Agricultural Economists

Abstract: The relation between the moment at which a recall of Dutch custard is initiated and the direct costs of this recall was investigated. A simulation model of the custard supply chain was developed to compare scenarios with and without a quarantine of 48 h at the storage of the production plant. The model consists of three parts; first the distribution of a 24,000 L batch of custard over the supply chain over time is simulated, second the time to detect spoilage bacteria with a recontamination test procedure is simulated, third the direct recall costs of custard over the different parts of the supply chain are calculated. Direct recall costs increase from about €25,000 per batch to €36,171 from 57 to 135 h in the situation without quarantine and from €25,000 to €36,648 from 123 h to 163 h for the situation with quarantine. Then costs decrease, because more and more custard is at the consumer level and only 0.13% of the consumers will ask for a refund. With low true contamination probabilities quarantine is not profitable, but at later detection moments with high probabilities it is. We conclude that a simulation model is a helpful tool to evaluate the efficiency of risk management strategies, like end-product testing and a quarantine situation.

Keywords: Agricultural; and; Food; Policy (search for similar items in EconPapers)
Pages: 16
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaa113:58133

DOI: 10.22004/ag.econ.58133

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