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Abstract

Historically, Jordan's traditional markets for fresh produce have been the Persian Gulf countries. However, these exports have declined in recent years and new markets in Europe have been tapped. One of the main constraints to expanding the European market is the lack of quality-oriented packing houses in Jordan. This study considers the feasibility of a vegetable packing house designed to meet the quality requirements of the European market. The overall objective is to evaluate the economic viability of packing and transporting various fresh produce items to the European market. Specifically, four transportation scenarios were evaluated using a comprehensive firm-level, dynamic and stochastic, multiple-year, capital budgeting computer simulation model. Simulation provides a very flexible technique that can easily incorporate risk and uncertainty into the investment decision-making process. The results show that the medium sized vegetable packing house is viable when serving the European markets. Also, the economic performance of the packing house improved when shipping by refrigerated truck. Furthermore, the stabilizing effect of land transport was captured in the much lower variability in the expected returns.

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