A method for evaluating industrial location alternatives

White, Leo (1978) A method for evaluating industrial location alternatives. Masters thesis, Memorial University of Newfoundland.

[English] PDF (Migrated (PDF/A Conversion) from original format: (application/pdf)) - Accepted Version Available under License - The author retains copyright ownership and moral rights in this thesis. Neither the thesis nor substantial extracts from it may be printed or otherwise reproduced without the author's permission. Download (15MB) [English] PDF - Accepted Version Available under License - The author retains copyright ownership and moral rights in this thesis. Neither the thesis nor substantial extracts from it may be printed or otherwise reproduced without the author's permission. (Original Version)

Abstract

The problem of choosing a location for an industry is complex and far-reaching in its consequences. Pure location theory attempts to explain existing spatial patterns by adopting simplifying assumptions to reduce the complexity. It does not offer a method for evaluating alternative locations. -- Such a method is developed based on the locational variance of cost factors and the relative size of cost factors in the cost structure of the industry. An exact mathematical relationship is presented for assigning weight to a location factor based on its contribution to the total locational variance of costs. -- [special characters omitted] -- Where Wᵢ is the weight for factor i -- Cᵢ is the expected annual cost for factor i at a specific location. -- σᵢ is the contribution of factor i to total locational variance. -- [special characters omitted] is the total locational variance. -- A method for evaluating intangible and purely personal factors is suggested and illustrated. Least cost locations are determined by an analysis of locational variance. Location alternatives are further evaluated by taking demand or market considerations into account. Conventional methods such as market forecasting and analysis of fixed and variable costs over the minimum planning horizon of fifteen years are used to contrast alternative locations. Uncertainty in demand estimates arising from imperfect information is approached using decision theory and expected value criteria. -- The regional problem in which a region is seeking or evaluating prospective industries is seen as the mirror image of the location problem. Regions should evaluate prospective industry in a rigorous manner to ensure that new industry is socially and environmentally acceptable and economically feasible. Such regional evaluation would reduce the likelihood of major industrial failures with their attendant social and economic ill effects. -- The method presented is easily comprehended, practical and rigorous. It is felt that use of this method will reduce the speculative element in evaluating location alternatives of prospective industries. In this way location decisions are put on a factual basis and analysed within the framework of the balance sheet.

Actions (login required)

View Item