Facility Location and the Theory of Production
The design and location of production facilities are important aspects of corporate strategy which can have a significant impact on the socio economy of nations and regions. Here, these decisions are recognized as being interrelated; that is, the optimal
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Facility Location and the Theory of Production
by Arthur P. Hurter, Jr. Department of Industrial Engineering and Management Sciences Northwestern University
and
Joseph S. Martinich School of Business Administration University of Missouri - SI. Louis
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Kluwer Academic Publishers Boston / Dordrecht / London
Distributors for North America: Kluwer Academic Publishers 101 Philip Drive Assinippi Park Norwell, Massachusetts 02061 USA Distributors for the UK and Ireland: Kluwer Academic Publishers MTP Press Limited Falcon House, Queen Square Lancaster LA 1 1RN, UNITED KINGDOM Distributors for all other countries: Kluwer Academic Publishers Group, Distribution Centre, Post Office Box 322 3300 AH Dordrecht, The NETHERLANDS
Library of Congress Cataloging-in-Publication Data Hurter, Jr, Arthur P Facility location and the theory of production. Includes Index. 1. Industry-Locatlon-Mathematlcal models 2 Production functions (Economic theory) I. Martinlch, Joseph Stanislaus, 1950II. Title. HD58.H87 1989 658.2'1 88-13196 ISBN-13: 978-94-010-7637-1
e-ISBN-13: 978-94-009-2518-2
001: 10.1007/978-94-009-2518-2
© 1989 by Kluwer· AcademiC Publishers Softcover reprint of the hardcover 1st edition 1989
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted In any form or by any means, mechanical, photOCOPYing, recording, or otherwise, without the prior written permission of the publishers, Kluwer AcademiC Publishers, 101 Philip Drive, AssinipPI park, Norwell, Massachusetts 02061.
To Florence, Vicki, and Michael for making it all worthwhile.
Contents
Dedication
v
Preface
ix
1 Introduction 2
Deterministic Production/Location Models on a Line
13
3 Deterministic Production/Location Models on Networks
45
4 Deterministic Production/Location Models on a Plane
75
5 Stochastic Production/Location Models on a Line
107
6 Stochastic Production/Location Models on Networks or a Plane
153
7 Policy Evaluation: Taxation
185
8 Policy Evaluation: Incentives and Regulation
211
9 Conclusion
229
References
235
Author Index
245
Subject Index
249 vii
Preface
The design and location of production facilities are important aspects of corporate strategy which can have a significant impact on the socioeconomy of nations and regions. Here, these decisions are recognized as being interrelated; that is, the optimal plant design (input mix and output level) depends on the location of the plant, and the optimal location of the plant depends on the design of the plant. Until the late 1950s, however, the questions of where a firm should locate its plant and what should be its planned input mix and output level were treated, for the most part, as separate questions, and were investigated by different groups of researchers. Although there was some recognition that these questions are interrelated [e.g., Pre doh I 1928; Hoover 1948; Isard 1956], no detailed analysis or formal structure was developed combining these two problems until the work of Moses [1958]. In recent ye
