ABSTRACT
In this chapter, we introduce the important problem of multiple locations of production of a product that is sold to buyers at many locations. Differing production costs at various locations need to be taken into account as well as the transportation costs of the product output to the buyers. The first problem is identifying, in the immediate period, the optimal flow of the product from each of the producing locations to each of the buyers’ locations. Then, given some time, as in the short-run period when some inputs can change, the main problem is determining where expansion of output should occur given an increase in demand at one or more locations.
