Pricing Plans for Managing Seasonal Deliveries by Dairy Cooperatives
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This study develops a method to devise pricing plans for dairy cooperatives to recover costs of handling seasonal milk deliveries from producers and the cost of satisfying handlers' cyclical fluid demand. Based on analyses of hauling and manufacturing costs, charges against producers and handlers are formulated. Manufacturing cost is the major component of producer charges. Give-up charges against handlers are determined by the cooperative's manufacturing cost, while hauling cost is the main consideration in servicing handlers' day-to-day fluctuation of fluid demand.