Weber's Least Cost Theory

Guy Tinius


model developed by Alfred Weber according to which the location of manufacturing establishments is determined by the minimization of three critical expenses: labor, transportation, and agglomeration; which affected location.

Bulk Reducing/ Gaining industries

Bulk Reducing - usually locate factories close to raw materials because the raw materials are heavier and bulkier than finished products.

Bulk Gaining - factory locations that are usually determined by accessibility to the market.

Bulk Reducing industries examples

  • An industry in which the inputs (materials, etc.) weighs more than the final product
  • is usually located near its source of inputs to minimize transportation costs
  • is related to the least cost theory by; having the location close to the main market

Bulk Gaining Industries examples

  • Industry that makes something that gains volume or weight during production
  • Needs to be located near where the product is sold to minimize transportation,so it doesn't cost more expensive to transport
  • is related to the least cost theory by; being located close to the market to reduce cost