LOAD-DISTANCE MODEL — Facility Location Analysis
LOAD-DISTANCE MODEL
Facility Location Decision Analysis
Operations Management | Quantitative Location Methods
SECTION 1: Overview
The Load-Distance (LD) Model is a quantitative technique used in operations management to
evaluate and select the optimal location for a facility — such as a warehouse, factory,
distribution center, or retail outlet. The model determines which candidate site minimizes the
total transportation effort required to serve all relevant destinations.
The model is based on a straightforward principle: the best facility location is one that is closest
to the locations it interacts with most — weighted by how frequently or how heavily those
interactions occur.
Why It Matters
Facility location is a long-term strategic decision. A poorly chosen location leads to excessive
transportation costs, longer delivery times, and reduced competitiveness. The Load-Distance
Model provides an objective, data-driven basis for this critical decision.
• Minimizes total logistics and transportation cost
• Applicable to manufacturing plants, warehouses, hospitals, schools, and service centers
• Can evaluate multiple candidate sites simultaneously
• Works alongside other tools such as factor rating and break-even analysis
SECTION 2: Core Formula
The Load-Distance score for a candidate facility site is calculated as:
LD = Σ ( lᵢ × dᵢ )
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LOAD-DISTANCE MODEL — Facility Location Analysis
Where each variable means:
Symbol Name Description
LD Load-Distance The total weighted distance for a candidate site. Lower is better.
Score
Σ Summation Sum across all demand/supply locations (i = 1 to n).
lᵢ Load The quantity, weight, volume, or number of trips to/from location i
per period.
dᵢ Distance The distance between the candidate facility site and location i.
i Index Represents each individual demand or supply point (customer,
supplier, etc.).
Decision Rule: Calculate the LD score for each candidate site. The site with the LOWEST LD score is
the optimal location.
SECTION 3: Distance Calculation Methods
Two common methods are used to calculate the distance (dᵢ) between the proposed facility (xₐ,
yₐ) and each destination (xᵦ, yᵦ):
3.1 Euclidean Distance (Straight-Line)
Measures the direct straight-line distance between two points on a coordinate grid. Best used
when transportation follows a direct route (e.g., air freight, pipelines, open terrain).
d = √ [ (xₐ − xᵦ)² + (yₐ − yᵦ)² ]
Use when: air transport, pipelines, direct routes, or when roads closely follow straight-line paths.
3.2 Rectilinear Distance (Manhattan / City-Block)
Measures distance along perpendicular paths — moving only horizontally and vertically, like
navigating a city grid. More realistic for urban road networks and warehouse aisle movement.
d = | xₐ − xᵦ | + | yₐ − yᵦ |
Use when: road networks, urban distribution, warehouse layouts, or any grid-based movement.
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LOAD-DISTANCE MODEL — Facility Location Analysis
Feature Euclidean Distance Rectilinear Distance
Formula √[(x₁-x₂)² + (y₁-y₂)²] |x₁-x₂| + |y₁-y₂|
Path Type Straight line Grid / right-angle path
Best For Air, pipelines, open terrain Road networks, urban routes
Result Always ≤ rectilinear distance Always ≥ Euclidean distance
Complexity Requires square root calculation Simple absolute value calculation
SECTION 4: Step-by-Step Procedure
Step Action Details
1 Identify Candidate List all possible facility locations with their map coordinates (x,
Sites y). These are the sites being evaluated.
2 Identify List all customers, suppliers, or service points. Record their
Demand/Supply Points coordinates (xᵢ, yᵢ) and loads (lᵢ) — e.g., trips/week, tons/month.
3 Choose Distance Decide whether to use Euclidean (straight-line) or Rectilinear
Method (city-block) distance based on the transportation context.
4 Calculate Distances For each candidate site, compute the distance to every
(dᵢ) demand/supply point using the chosen formula.
5 Compute LD Scores For each candidate site, multiply each load (lᵢ) by its distance
(dᵢ), then sum all products: LD = Σ(lᵢ × dᵢ).
6 Compare & Select Compare the LD scores of all candidate sites. The site with the
LOWEST score is the optimal location.
SECTION 5: Worked Example
A logistics company is selecting a location for a new distribution warehouse. Two candidate
sites are available. The company serves three customers with varying delivery frequencies.
Given Data
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LOAD-DISTANCE MODEL — Facility Location Analysis
Customer X Coord. Y Coord. Load (lᵢ)
trips/wk
C1 2 8 10
C2 5 2 20
C3 9 6 15
Candidate Sites: Site A = (3, 5) | Site B = (7, 4)
Distance Method: Euclidean — d = √[(xₐ−xᵦ)² + (yₐ−yᵦ)²]
Calculations for Site A (3, 5)
Point lᵢ Coordin Distance Formula dᵢ lᵢ × dᵢ
ates
C1 10 (2,8) √[(3−2)²+(5−8)²] = √(1+9) 3.16 31.6
C2 20 (5,2) √[(3−5)²+(5−2)²] = √(4+9) 3.61 72.2
C3 15 (9,6) √[(3−9)²+(5−6)²] = √(36+1) 6.08 91.2
TOTAL 195.0
Calculations for Site B (7, 4)
Point lᵢ Coordin Distance Formula dᵢ lᵢ × dᵢ
ates
C1 10 (2,8) √[(7−2)²+(4−8)²] = √(25+16) 6.40 64.0
C2 20 (5,2) √[(7−5)²+(4−2)²] = √(4+4) 2.83 56.6
C3 15 (9,6) √[(7−9)²+(4−6)²] = √(4+4) 2.83 42.5
TOTAL 163.1
RESULT
LD Score — Site A: 195.0 | LD Score — Site B: 163.1
✅ Site B is the OPTIMAL location (163.1 < 195.0)
SECTION 6: Center of Gravity Method
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LOAD-DISTANCE MODEL — Facility Location Analysis
The Center of Gravity (CoG) method is a companion approach to the Load-Distance Model.
Instead of comparing pre-selected candidate sites, it mathematically computes the single
theoretically ideal location that minimizes weighted distances — giving you the best possible
coordinates to target.
Formulas
x* = Σ (lᵢ × xᵢ) / Σ lᵢ
y* = Σ (lᵢ × yᵢ) / Σ lᵢ
Where (x*, y*) is the optimal facility coordinates, lᵢ is the load at each point, and (xᵢ, yᵢ) are the
coordinates of each demand/supply point.
Worked Example (using same data)
Total Load = 10 + 20 + 15 = 45 trips/week
x* = [(10×2) + (20×5) + (15×9)] / 45 = [20+100+135] /
45 = 255/45 = 5.67
y* = [(10×8) + (20×2) + (15×6)] / 45 = [80+40+90] / 45
= 210/45 = 4.67
The theoretically optimal coordinates are approximately (5.67, 4.67). This point can then be
used to identify the nearest available real-world site, or compared against candidate sites in the
Load-Distance evaluation.
Site B at (7, 4) is closest to the Center of Gravity (5.67, 4.67) — consistent with its lower LD score.
SECTION 7: Advantages & Limitations
✔ Advantages ✘ Limitations
• Simple and easy to understand and apply • Ignores other factors: land cost, labor, taxes,
zoning
• Handles multiple destinations simultaneously • Distance does not always reflect actual
transport cost or time
• Objective and data-driven — reduces bias • Coordinate accuracy directly affects the result
• Works with both Euclidean and rectilinear • Static model — does not account for future
distance demand shifts
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LOAD-DISTANCE MODEL — Facility Location Analysis
✔ Advantages ✘ Limitations
• Can substitute cost for load to reflect real • Treats all loads equally in terms of urgency or
expenses value
• Can be combined with Center of Gravity for • Does not consider infrastructure quality (roads,
stronger analysis ports)
• Applicable to many industries and facility types • Linear distance may not reflect real-world travel
paths
• Easily updated as demand or locations change • Best used as a screening tool, not a final
decision
SECTION 8: Summary
Item Description
Model Name Load-Distance (LD) Model
Purpose Select the optimal facility location to minimize transportation effort
Core Formula LD = Σ (lᵢ × dᵢ)
Decision Rule Choose the candidate site with the LOWEST LD score
Distance Options Euclidean (straight-line) or Rectilinear (city-block)
Companion Method Center of Gravity — finds ideal coordinates directly
Best Used For Warehouses, plants, distribution centers, service facilities
Key Limitation Does not account for cost, zoning, taxes, or infrastructure
The Load-Distance Model is a powerful yet practical screening tool for facility location. It is most effective
when combined with qualitative factors, cost analysis, and site visits to arrive at a well-rounded location
decision.
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