Locational Triangle

Locational Triangle

Locational triangle arises when there is the condition of two raw materials are fixed

and gross. Base line of triangle ( R1 and R2) represents the places where fixed raw materials are found.

M= Market is at the apex of the triangle

P= Industrial Location

If the industry is located at the raw material source R1 then raw material R2 must be transported to industrial location R1 and the finished products must be transported to the market M which causes more transportation costs. Likewise, the same thing happens when industry is located at R2.

If the industry is located at M, then R1 and R2must be transported to M which results more transport costs. If the industry is located at the halfway between R1 and R2, then the transport cost to bring the raw materials from R1 and R2 is equal. Transport cost involved in transporting the finished goods to the market decreases because of the small distance to the market. In the final analysis, the transport cost for raw materials to the industrial location P and the finished products to market M from P together is the least when industry is located at P. There is thus a chance for increased profit for the industry.