Q2 Z2,(Q2) Z2(Q2) - Institute for Water Resources - U.S. Army

eceive the same criticisms as above.
Most micro approaches to the problem were attempts to im-
plement full distribution analysis. Very few studies involved
empiricalwork, and most empirical work found was relatively
poor in quality and in method. A pioneering work is found in
Umpleby's [123] masters dissertation. Although his work is
basically verbal, he stresses the importance of the costs of
production, market prices, the nature of the demand, substitute
modes available, and en-route delays as they affect selling
prices. 12 These items play a large role in the analysis
contained in the present paper.
Case studies of distribution costs for individual firms
are also found in the literature. 13
Wein [127] attempts to construct a point demand for air
freight. Air freight demand is made up of a normal component
(what is traveling at today's rates) plus air cargo potential
(which is the penetration rate times the tonnages in categories
of goods which are air candidates). Prime categories for air are
general and household freight traveling by class I, II, and III
common and contract carriers, LCL rail freight, LTL truck freight,
rail freight forwarder traffic, REA traffic, and surface mail.
The penetration rate is calculated by comparing the current air
rate versus the competing mode's rate. Multiplying the penetra-
tion rate times the tonnage in each category, then adding this
to the normal component, yields the demand point for
today's rate. Vein generally neglects all other costs
12 Arthur Umpleby, A Study of the Economics of Air Freight in
Production and DiiTAbution, (Columbus, Ohio State University,
Masters Thesis, 1957), pp. 23-24. •
13 See [3], [6], [64], [86], [102].
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