In the Case of Wholesale Food Distributors, It’s All About Location
Posted: December 11, 2013
“Our model addresses the problem of how to move food from producers to consumers efficiently,” said Hamideh Etamadnia, a member of the Distribution Team and lead author of the study. “In the case of farmers’ markets, producers bring their products directly to consumers themselves. But most products are trucked from processing facilities to wholesale distributors, and then on to retail stores. Our model will help identify the optimal locations of these intermediary distributors so as to minimize transportation costs and to maximize the number of producers and retailers that they serve.”
Etamadnia and her colleagues developed the mathematical model to consider transportation and distributor-construction costs, as well as several possible constraints that will allow them to look at various “what if” scenarios.
“The constraints that we built into our model allow us to understand how certain changes might affect the optimal locations of wholesale hubs,” she explained. “For example, officials who want to promote regional agriculture could place constraints on the distance food travels, to see how their region’s existing distribution structure would need to change for such a policy to succeed.”
To test their model, the researchers applied it to the meat supply chain in the Northeastern U.S., which comprises 433 counties. Using County Business Patterns data from the U.S. Department of Commerce, they identified which counties contain slaughtering or meat-processing facilities, and which counties contain retail meat markets. Inserting these data into their mathematical model, they conducted several simulations to determine the optimal locations for wholesale distributors connecting these slaughter and processing facilities with retail markets. Their results show how optimal distributor locations change based on a number of variables, including distributor size and capacity, road conditions, and gas prices.
“Our team can use this model to conduct simulations with other supply chains, such as those for fresh fruits and vegetables,” said Distribution Team Leader, Miguel Gomez. “These simulations will help us to identify the kinds of changes that would be required of the Northeastern U.S. food supply chain in order to support increased regionalization, and what kinds of economic effects such changes would have.”