Factory Gate Pricing: An Analysis of the Dutch Retail Distribution

ERIM Report Series Reference No. ERS-2004-023-LIS

CentER Discussion Paper No. 2004-35

33 Pages Posted: 24 Jun 2004

See all articles by H.M. Le Blanc

H.M. Le Blanc

affiliation not provided to SSRN

F. Cruijssen

Tilburg University - Center and Faculty of Economics and Business Administration

Hein Fleuren

Tilburg University - Center for Economic Research (CentER)

M. B. M. de Koster

Erasmus University Rotterdam (EUR) - Department of Technology and Operations Management

Date Written: June 2004 8,

Abstract

Factory Gate Pricing (FGP) is a relatively new phenomenon in retail distribution. Under FGP, products are no longer delivered at the retailer distribution center, but collected by the retailer at the factory gates of the suppliers. Owing to both the asymmetry in the distribution networks (the supplier sites greatly outnumber the retailer distribution centers) and the better inventory and transport coordination mechanisms, this is likely to result in high savings. A mathematical model was used to analyze the benefits of FGP for a case study in the Dutch retail sector. Extensive numerical results are presented to show the effect of the orchestration shift from supplier to retailer, the improved coordination mechanisms, and sector-wide cooperation.

Keywords: supply chain management, retail distribution, factory gate pricing

JEL Classification: M, M11, R4, L22

Suggested Citation

Le Blanc, H.M. and Cruijssen, F. and Fleuren, Hein and de Koster, M.B.M. René, Factory Gate Pricing: An Analysis of the Dutch Retail Distribution (June 2004 8,). ; CentER Discussion Paper No. 2004-35. Available at SSRN: https://ssrn.com/abstract=557826

H.M. Le Blanc (Contact Author)

affiliation not provided to SSRN

F. Cruijssen

Tilburg University - Center and Faculty of Economics and Business Administration ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 3063 (Phone)

Hein Fleuren

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

M.B.M. René De Koster

Erasmus University Rotterdam (EUR) - Department of Technology and Operations Management ( email )

RSM Erasmus University
PO Box 1738
3000 DR Rotterdam
Netherlands
+31 10 408 1719 (Phone)
+31 10 408 9014 (Fax)

HOME PAGE: http://www.rsm.nl/rdekoster

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