1heorles of lndusLrlal LocaLlon

maln ClasslflcaLlons
W 1heorles can be relaLed Lo cerLaln facLors
W Cost factors %Jeber 1909)
W ocat|ona| |nterdependence %oLelllng 1929)
W emand %Losch 1939)
W 9rof|t %mlLh and red %1971))
lfred Jeber %1909)
leost cost 1beoty
W lndusLry ls locaLed where Lhe LransporLaLlon
cosLs of raw maLerlals and flnal producL ls a
mlnlmum
W e had Lwo cases
1he weiqht Losinq cose
W 1he welghL of Lhe flnal producL ls less Lhan Lhe
welghL of Lhe raw maLerlal golng lnLo maklng
Lhe producL
1he weiqht Losinq cose
W 1he welghL of Lhe flnal producL ls less Lhan Lhe
welghL of Lhe raw maLerlal golng lnLo maklng
Lhe producL
1he weiqht Losinq cose
W 1he welghL of Lhe flnal producL ls less Lhan Lhe
welghL of Lhe raw maLerlal golng lnLo maklng
Lhe producL
1he weiqht Losinq cose
W 1he flnal producL ls heavler Lhan
Lhe raw maLerlal LhaL requlre
LransporL
W usually Lhls ls a case of some
ublqulLous %everywhere avallable)
raw maLerlal such as waLer
1he weiqhtqoininq cose
1he weiqhtqoininq cose
1he weiqhtqoininq cose
LocaLlon 1rlangle
W lfred Jeber used a locaLlon Lrlangle Lo lllusLraLe
hls approach
W ls example belng LhaL only 2 raw maLerlals are
needed Loglcally a flrm wlll locaLe wlLhln Lhe
Lrlangle [olnlng Lhe Lwo polnLs where Lhe markeL
ls slLuaLed Lach polnL havlng a pull on Lhe facLory
dependlng on lLs LransporL cosLs
W JelghL loss lndusLrles are raw maLerlal
orlenLaLed
W JelghL Caln lndusLrles are markeL orlenLaLed
W e devlsed Lhe maLerlal lndex
W MaLerlal lndex JelghL of 8aw MaLerlal
JelghL of llnlshed roducL
Jeber bullL on hls ldea Lo use sotims
%concenLrlc rlngs LhaL connecL equalcosL
polnLs)
nd sodopones %IarlaLlons ln LoLal LransporL
cosLs)
lsoLlms and lsodapanes
ave a go!
W ccordlng Lo Jeber where wlll you locaLe Lhe new brewery
and why?
,ater|a|s per
case
ka|| 1ransport
cost
koad transport
cost
ops Craln 1 per mlle 110 per mlle
prlng JaLer 13p per mlle 10p per mlle
8oLLled 8eer 23p per mlle 28p per mlle
,ater|a| (per case) ka|| 1ransport Cost koad 1ransport Cost
lron 130/mlle 162/mlle
Coal 73p/mlle 82p/mlle
Leel 67p/mlle 73p/mlle
8oom|ng 1own
now puL Jebers Lheory Lo work ln decldlng where Lo locaLe a new
sLeel facLory for a growlng Lown
oLelllng 1929
LocaLlonal lnLerdependence
W 1hls ls Lhe lmpacL of demand upon locaLlon
W 1he lnLeracLlon of enLrepreneurlal declslons
W e used Lwo lce cream sellers on a beach as
an example
s wlLh all models lL made cerLaln
ssumpLlons
W Lvenly dlsLrlbuLed populaLlon
W MarkeL served by Lwo compeLlng
enLrepreneurs wlLh equal producLlon cosLs
and capable of supplylng Lhe enLlre markeL
produclng Lwo ldenLlcal producLs
W lnflnlLely LlasLlc demand
W CosLs of producLlon are Lhe same everywhere
W LnLrepreneurs capable of relocaLlng wlLhouL
cosL
W oLelllng belleved LhaL for a Llme each seller
would wanL Lo ouL do each oLher by cuLLlng prlces
or changlng poslLlon on Lhe beach
W fLer falllng Lo ousL each oLher %lnce Lhey are
equally able Lo compeLe) Lhey would agree Lo
compromlse by agreelng Lo sell aL Lhe same prlce
aL dlfferenL locaLlons Lherefore each would have a
30 share of Lhe markeL
W 1hey would poslLlon Lhemselves aL Lhe cenLre of
Lhe Lwo markeL areas
W lf anoLher seller enLered Lhe markeL a slmllar
process would Lake place
W luL
W 1he lnlLlal assumpLlons were seen as
unreallsLlc and very rare ln buslness
W neverLheless lL dld look aL Lhe prlnclple of
declslon maklng based on compeLlng
organlsaLlons
Croup work
W JlLhln your Lables wrlLe down Lhe good and bad
polnLs LhaL you foresee wlLh Lhese models 8oLh
groups dlscuss Lhe evoluLlon of lndusLrlal locaLlon
Lheory for Jednesday where Lhere wlll be a class
lead dlscusslon
W 1ry Lo flnd Lhe meanlng for Lhe Lerm 'lrlcLlon of
ulsLance'
W 8oys flnd ouL and wrlLe a resume of mlLh and
red's Lheory
W Clrl's flnd ouL and wrlLe a resume of Lhe maln
polnLs of Losch's Lheory
lurLher readlng
W Culnness and nagle pages 137 139
W hLLp//wwws[suedu/faculLy/waLklns/loschhL
m
W u Jaugh pages 307312
W 8 knapp pages 393399