Eliminating food under-served areas : a price-collecting travel salesman problem with profits approach

Abstract

Food under-served areas (FUAs) have been studied for several decades and from a vast variety of fields. Notwithstanding the significant number of financial resources put into it, FUAs still exist in the United States. Most researchers have focused on the consumer perspective to explain the underlying determinants of FUAs. In contrast, questions regarding logistical reasons for certain food outlets not offering healthy food have remained unanswered. Provided the context in which food distributors and food outlets operate, this research's fundamental premise is that food outlets in FUAs do not account for enough fresh food demand. Hence, FUAs do not meet the minimum order quantity required by food distributors to cover for their operations' logistical costs and make a profit.

The results from this research show that the inability of small food outlets to place large-enough orders leaves them out of the established food supply chain distribution tours. The supply mechanism of food outlets was modeled throughout a Price Collecting Travel Salesman Problem with Profits integer optimization program. The results show that the interaction between supply and demand in the food distribution market determines the existence of FUAs. An intervention strategy focused on improving the profit level of the supply side allows the distributor to incur higher costs and visit additional food outlets. The main limitation is that, as the tour initially includes the food outlets with the highest demand, the incremental net unit revenue has to increase significantly for more food outlets be included in the tours. A very promising strategy is to consolidate demands. The effect from the food distributors' perspective is that logistical costs reduce as larger orders are delivered to less locations. Consolidates become able to meet the minimum order quantity of the food distributor and significantly more stops are included in the tour. Thus, demand consolidation helps eliminating FUAs.