Weber's Least Cost Theory: Determining Optimal Locations for Manufacturing Plants, Lecture notes of Topography

Weber’s Least Cost Theory

Theory was created to determine the location of manufacturing plants. The location could be different

based on if the final product weighed more or less than the raw materials. According to the theory, plants

will be located to maximize profits and minimize costs.

Locations are determined by identifying the sources of RAW MATERIALS (R OR S) as well as the

MARKET (M). Once these are identified, lines are down to show points of equal transport costs. Where

the three circles come together is where the PLANT (P) should be located.

The Least Cost Theory is also based on several assumptions.

 Resources, markets and processing plants are all located in one country.

 The area under consideration is the same in climate, topography, technology and economic

system.

 Considers only one finished product at a time.

 Transportation costs vary based on the weight of the items shipped and distance shipped.

 Raw materials are at a fixed and known location

 Market location is also at a fixed and known location

 Labor

 Agglomeration

 Deglomeration

Transportation

Least Cost Theory states that the location of a processing plant will in an area that ensures

the lowest cost of moving raw materials to the processing plant and moving the finished