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The Cost of Supplying Segmented Consumers From a Central Facility

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  • CORAL - Centre for Operations Research Applications in Logistics
  • Department of Business Studies
Organizations regularly face the strategic marketing decision which groups of consumers they should target. A potential problem, highlighted in Steenkamp et al. (2002), is that the target consumers may be so widely dispersed that an organization cannot serve its customers cost-effectively. We consider three measures of dispersion of demand points: the average distance between demand points, the maximum distance and the surface size.In our distribution model, all demand points are restocked from a central facility. The observed logistics costs are determined using the tour length estimations described in Daganzo (2004). Normal, continuous travel distance estimates require that demand locations are uniformly distributed across the plane, but we also consider scenarios with non-uniformly distributed demand locations. The resulting travel distances are highly correlated with our surface size measure if there are many stops on a route and with our average distance measure if there are relatively few.
Original languageEnglish
Publication year2009
Publication statusPublished - 2009
Event14th HKSTS International Conference - Transportation and Geography - Hong Kong, China
Duration: 10 Dec 200912 Dec 2009


Conference14th HKSTS International Conference - Transportation and Geography
CityHong Kong

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ID: 223360