The Zone Definition Problem and Location-Allocation Modeling

Location-allocation modeling is a frequently used set of techniques for solving a variety of locational problems, some of which can be politically sensitive. The typical application of a location-allocation model involves locating facilities by selecting a set of sites from a larger set of candidate sites, with the selection procedure being a function of ''optimality'' in terms of the allocation of demand to the selected sites. In this paper we examine the sensitivity of one particular type of location-allocation model, the p-median procedure, to the definition of spatial units for which demand is measured. We show that a p-median solution is optimal only for a particular definition of spatial units and that variations in the definition of spatial units can cause large deviations in optimal facility locations. The broad implication of these findings is that the outcome of any location-allocation procedure using aggregate data should not be relied upon for planning purposes. This has important implications for a large variety of applications.