The tramhipment model of linear programming is utilized in this study to consider simultaneously the costs of shipping raw materials, processing, and shipping final product. The problem concerns the location and size of California cattle slaughtering plants given the location and quantity of slaughter animals ana the final product demand. An iterative procedure is mea; to incorporate economies at scale in processing in addition to transfer costs in obtaining the minimum cost solution. Thirty-two regions in California plm two regiom each for out-of-state animals and dressed beef shipments are considered. Slaughtering is indicated for 12 in-state regions with plants of varying scale, a solution which indicates the importance of assembly and distribution costs as well as economies of scale in processing in determining the optimum size of plant.T HIS PAPER deals with the problem of area adjustments in processing plant facilities when consideration is given to shipment patterns of both raw product factors and final product, and to economies of scale in processing plant costs. It is shown that a modified form of the transhipment model provides a convenient computational device for deriving optimum plant location under certain conditions. The approach and method of solution may be of general interest to research workers concerned with efficiency in marketing and interregional competition, although the specific problem relates to the beef slaughter industry in California.The problem posed is this; There are various areas with given supplies of raw product (live animals) and/or given demand for final product (meat). Transportation costs per unit for live animal and meat are given and do not vary with quantity shipped. Slaughtering costs per animal vary with size of plant and with area, depending on such costs as labor, utilities, and taxes. In this framework, then, the questions to be answered \) Ciannini Foundation Paper No. 247. This research was undertaken as a contrfbuting project to the Western Regional Research Project WM-37. This paper presents an alternative method of solution to the basic problem analyzed in a Ph.D. dissertation by S. H.
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