Development of Physical Distribution Channel Choice Model for Freight Modeling

Abstract

The study developed the physical distribution channel choice models reflecting decision making of the firms and studied how choice decision factors influence the selection of distribution channel. The distribution channel survey data in Korea was used to do empirical study. In creating a choice set, Korean distribution channels are classified into two main choice channels that are direct and indirect channel. Further, indirect channel is classified into other three channels according to the type of intermediate point. There are the channel through distribution center, the channel through wholesale store, and the channel through outsourcing logistics where the location of intermediate points are made by the logistics company rather than manufacturers themselves. The paper developed choice models by applying both binary and multinomial logit model with several model alternatives. The results of study show that that binary logit model seemingly satisfies distribution channel choice behaviors. The several hypothesis tests on how each factors influence the selecting choice of distribution channel are performed and discussed in the study as well.