Evaluation of Supply Chain Using Hierarchical Analysis

Abstract

Purpose: The paper is aimed at extending the ideas about the functioning of distribution networks. The main objective of the research is to determine the extent to which the development of wholesale trade within the central places of the region and the incomes of the population have an impact on the volume of shipped goods in municipal areas. Design/Methodology/Approach: Hierarchical linear modeling (HLM) is used in this article. This method defines group and intergroup variation taking into account the multi-level nature of the processes. The variation in the volume of products shipped in municipalities is considered as a result of the influence of the factors at two levels: population incomes (municipal level) and wholesale trade turnover (regional level). The research is conducted on data obtained from 331 municipalities located in 7 constituent entities of the Russian Federation. Findings: The relevance of the constructed model indicates the possibility of application of the hierarchical analysis methods in the sales chain research. For 7 subjects of the Russian Federation under consideration, it was found that the role of distribution networks is small. Practical Implications: It is determined that in order to promote products it is required to pay attention to the role of the wholesale link in the development of production of the territories in question. The use of hierarchical analysis in market research makes possible to apply a balanced approach to the creation of favorable conditions in the development of public and private programs for market infrastructure development. Originality/Value: The use of hierarchical analysis methods in the research of sales chains expands the understanding of their functioning, since, unlike others, it makes possible to take into account the impact of the factors at several levels of their formation.