Industrial Landscapes Least Cost Location Theory Classification of

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Industrial Landscapes Least Cost Location Theory

Industrial Landscapes Least Cost Location Theory

Classification of Manufacturing Industries 1. Processing Industries – Initial Processing Industries • A single

Classification of Manufacturing Industries 1. Processing Industries – Initial Processing Industries • A single raw material. • Eg. Dairy processing – Complex Processing Industries • More than one raw material • Eg. Steel making

Classification of Manufacturing Industries 2. Fabricating Industries – Assembly of a finished or semi-finished

Classification of Manufacturing Industries 2. Fabricating Industries – Assembly of a finished or semi-finished product – Eg. Automobile

Least Cost Location Theory By Weber

Least Cost Location Theory By Weber

Assumption • Isotropic plain (uniform in culture, climate , economic and political system……) •

Assumption • Isotropic plain (uniform in culture, climate , economic and political system……) • Ubiquitous resources are found everywhere • Some resources are localized • Transport cost is a function of weight and distance • Labour has a given pattern of distribution

Assumption • Markets are fixed at certain specific point • Perfect competition exists •

Assumption • Markets are fixed at certain specific point • Perfect competition exists • Industrialists are economic man

Building of theory Material Index Location Triangle Location Polygon Isotims Isodapanes / Critical Isodapane

Building of theory Material Index Location Triangle Location Polygon Isotims Isodapanes / Critical Isodapane Varignon Frame Effects of cheap labour and agglomeration

Material Index • Material Index eg. (To produce 10 tonnes cement) Limestone 11. 2

Material Index • Material Index eg. (To produce 10 tonnes cement) Limestone 11. 2 tonnes Clay or shale 2. 8 Coal 3. 0 Gypsum 0. 25 Total 18. 25 ----------------------Material Index = (18. 25/10. 00) = 1. 825

Material Index > 1. 0 (weight-loss) Materials oriented industry Material Index < 1. 0

Material Index > 1. 0 (weight-loss) Materials oriented industry Material Index < 1. 0 (weight-gain) Market oriented industry Material Index = 1. 0 Footloose Industry

Location Triangle

Location Triangle

Location Polygon

Location Polygon

Isotims – Cost surface

Isotims – Cost surface

Isodapanes / Critical Isodapane

Isodapanes / Critical Isodapane

Varignon Frame

Varignon Frame

Effect of Cheap Labour Having cheap labour can save $16 additional transport cost. Firm

Effect of Cheap Labour Having cheap labour can save $16 additional transport cost. Firm will not be moved to L 1 but it will be moved to L 2

Effect of Agglomeration

Effect of Agglomeration

Demerits • Transport Costs – Decline the importance of transport costs – Stepping of

Demerits • Transport Costs – Decline the importance of transport costs – Stepping of Freight Rates – Variations in the Transport Modes

Demerits Stepping of Freight Rates

Demerits Stepping of Freight Rates

Demertis Transport Rate for 3 main carriers

Demertis Transport Rate for 3 main carriers

Demerits • • Isotropic plain is not our real world Importance of other properties

Demerits • • Isotropic plain is not our real world Importance of other properties of raw materials Market is not a fixed point Perfect competition does not exist A Static Model Nature of Industries Mobile nature of labour Economic man

Merits • Founder of modern industrial location theory • Point out transport cost as

Merits • Founder of modern industrial location theory • Point out transport cost as a key factor to determine industrial location • Distinct ubiquitous and localized raw materials • Distinct various orientations of different industries • Conceptual instrument for understanding the locational patterns of industries

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