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Abstract: For any product there is a set of distribution activities which must be performed between the supplier and the retailer. It is general practice today in the food industry to ship and store merchandise in supplier warehouses and then to retailers' warehouses for reshipment to retail stores. Frequently both supplier and retailer warehouses are located in the same city (Fig. 1). This practice of putting stocks in many cities creates a substantial cost burden in warehouses, inventories and transportation. A recent development in food distribution, primarily in the warehousing sector, is changing traditional marketing practices and the competitive relationships of firms in the industry. This development, known as consolidation shipping, and incorporating the storage, consolidation and distribution functions, is gaining in popularity among large and small food manufacturers. The purpose of this paper is to examine some of the economic relationships of consolidation shipping as an alternative distribution system for mushroom processors.
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