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Example of a location allocation analysis.

Location-allocation uses algorithms in a geographic information system to determine the best location for one or more facilities that will best service a given set of demand points. Thus, there are two aspects to the process: determining the best supply location(s) (Location Analysis), and determining to which supply location(s) each demand point or points should be assigned. The location-allocation may take into account such factors as the number of facilities available, their cost, and the maximum impedance from a facility to a service point in order to assign the point to one or more facilities [1].

Network datasets are often used in location-allocation analysis. A network dataset is a dataset that stores topologically connected source features [2]. A topologically correct roads network is an example of a network dataset that is used in network analysis as a critical component in the location-allocation modeling process. For example, if a business owner is trying to determine where to open a new store, a topologically correct roads network and location-allocation would help the owner determine where to place a store that is nearest in distance and quickest in travel time for each of the customers.

Each location component of the analysis may be homogeneous (such as locating 3 essentially equal coffee shops). However, they may also consist of varying types (such as regional distribution centers and local supply houses). Whether a single location or multiple location will be located may be considered. The service types and supply capacities may also be factors. Actual physical siting may also be from discrete points, or selected by the algorithm within an acceptable continuous range of space. Demand types also differ, being deterministic or probabilistic.[3].


Location is often the most important factor in determining if a business will be successful or not. Facilities can reduce costs and keep their accessibility high by using location-allocation analysis. Private- and public-sector organizations can use location-allocation analysis to find the optimal site for a new facility that will service the demand points in the most efficient way possible. However, users should realize that the applications of location-allocation analysis varies depending on the project [4]. Examples of private-sector organizations that can use location-allocation are restaurants and retail outlets. Examples of public-sector facilities are schools, hospitals, and fire stations.[5]

At least the following six problem types can be address with a location-allocation analysis[6]:

  • Minimize impedance
  • Maximize coverage
  • Minimize facilities
  • Maximize attendance
  • Maximize market share
  • Target market share


  • A software package feature which performs network analysis
  • A network dataset layer
  • A layer of demand points
  • A layer of candidate locations

See also


  1. Wade, T. and Sommer, S. eds. A to Z GIS
  2. Network dataset definition ESRI, support. GIS Dictrionary. Web. 28 October 2014.
  3. Azarmand, Z. and Jami, E.N. Location Allocation Problem
  4. Location-allocation analysis. ArcGIS Help 10.1. ESRI, n.d. Web. 28 Oct. 2014
  5. Location-allocation analysis. ArcGIS Help 10.1. ESRI, n.d. Web. 28 Oct. 2014.
  6. Location-allocation analysis. ArcGIS Help 10.1. ESRI, n.d. Web. 31 Oct 2016.