What is the material index?

The material index is a measure that often considered an industrial enterprise when deciding where to find location. This index represents the weight ratio of local materials used in the production of the product to the weight of the produced product in its final form. If the material index is greater than 1, it suggests that the raw materials lose part of its weight during the production process. If the material index is less than 1, it indicates that weight gains during the process, so the final weight of the finished product is greater than that of local raw materials used. This is important in determining the cost of transporting raw materials in relation to the cost of supplying the finished product. Business would like to be placed near the source of its raw materials or markets, a decision that Would to be influenced by the traffic costs of materials. Decisions on where to find would also actually be influenced by other factors in business economics such as labor costs that could outweigh any savings in shippinggoods.

The

model submitted by Weber suggests that the industrial industry with the high material index tends to locate near the sources of its local raw materials to reduce the cost of transporting these materials. In this situation, it is said that business has material orientation. Examples of industries with a high material index can be found in the food processing industry, where substances are extracted from agricultural inputs, for example in sugar refining. Other factors that are the same would probably achieve savings from finding near the place where agricultural raw materials are grown.

The industry with a low material index would be more likely to be located closer to its final markets, reducing the cost of transporting goods produced to markets. These businesses would have what is known as market orientation. A low -material index can use materIls that are widely available and not specifically locals. For example, a non -alcoholic beverage manufacturer would use a significant amount of water in the production process. Even if the company used local fruit in its production, the final product would prevail over the local materials used in the process.