See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/282286105

The Role of GIS in Industrial Location Analysis

Conference Paper · September 2014

CITATIONS READS

4 7,532

1 author:

Aleksandar Rikalovic
University of Novi Sad
31 PUBLICATIONS   625 CITATIONS   

SEE PROFILE

Some of the authors of this publication are also working on these related projects:

Industrial Site (Location) Analysis View project

Towards Smart Factory for Industry 4.0: A Comprehensive Approach View project

All content following this page was uploaded by Aleksandar Rikalovic on 16 March 2016.

The user has requested enhancement of the downloaded file.

 XVI International Scientific Conference on Industrial Systems (IS'14)
Novi Sad, Serbia, October 15. – 17. 2014.
University of Novi Sad, Faculty of Technical Sciences,
Department for Industrial Engineering and Management
Available online at http://www.iim.ftn.uns.ac.rs/conferences/is14/

The role of GIS in industrial location analysis

Aleksandar Rikalovic
Teaching assistant, Faculty of technical sciences, Serbia, a.rikalovic@uns.ac.rs
Ilija Cosic
Full professor, Faculty of technical sciences, Serbia, ilijac@uns.ac.rs
Djordje Lazarevic
Teaching assistant, Faculty of technical sciences, Serbia, heyjo@gmail.com

Abstract
Industrial location (site) selection is a strategic decision and in that sense determining the location is a
critical point on the road to success or failure of the company. One of the main goals of industrial
location selection is finding optimal location with desired conditions. To select the optimal industrial
location it is necessary to do a broad spatial location analysis. Geographic Information Systems (GIS)
are ideal for this type of spatial analysis which provides functionality to capture, store, query, and
analyse geographic information. Recent development in field of spatial analysis leads to dramatic
improvements in the capabilities of GIS in location analysis. These development are reviewed through
distance analysis, attribute data analysis, multi-criteria analysis etc. This paper presents the role of
GIS in industrial location analysis with examples.
Key words: Geographic Information Systems (GIS), Multi-criteria decision analysis (MCDA), Spatial
Decision support Systems (SDSS)

1. INTRODUCTION factors that could have conflicting objectives [9]. The

challenge is how to take a broad spatial industrial
Where to locate industrial facilities is the most important location analysis: applying geographic information
and far-reaching strategic decision faced by industry systems seems to be the most appropriate tool for
managers [1]. Answers to these questions provides: spatial analysis and strategic decision making [10].
operational research, geographic information systems
and computer science [2]. Traditionally industrial Geographic information systems (GIS) are powerful tool
location analysis was considered in the framework of designed for spatial analysis which provides
operational research [3]. Nowadays, intelligent systems functionality to capture, store, query, analyse, display
and output geographic information [11]. As such they
[4] and geographic information systems [5] are
have big influence in spatial decision making process.
increasingly used in location analysis.
Recent development in field of spatial analysis leads to
The industrial location analysis is divided into two dramatic improvements in the capabilities of GIS in
phases: the macro-location analysis and micro-location location analysis. These developments are reviewed
analysis [6]. The macro location is the geographical through: distance analysis, attribute data analysis,
area, which can meet the basic requirements for multi-criteria analysis etc.
construction and development of industry with minimal
To address all of the above aspects we analyse GIS
operating costs. The micro location is the specific place
functions in industrial location analysis in a study case
in the macro location that meets technical,
of Vojvodina, region in Serbia.
infrastructural and working process requirements [7].
This paper is organized as follows. In Section 2, we
Industrial decision making is based on numerous data
summarize the literature overview in the industrial
concerning the problem. It has been estimated that 80%
location field, pointing out the role of the geographic
of data used by managers and decision makers are
information systems in industrial location analysis. In
geographical (spatial) in nature [8]. Decision problems
Section 3 we present the role of the geographic
that involve geographical data are referred to as
information systems in industrial location analysis with
geographical or spatial decision problems [5]. Spatial
examples. Section 4 derives some conclusions and
decision making is a highly complex process of
directions for future research.
choosing among alternatives to attain an objective or a
set of objectives under constraints. Not only do they
often involve numerous technical requirements, but they
may also contain economic, social, and environmental

IS'14
300
2. BACKGROUND
The location has a major impact on the overall risk and
industry profit [12]. Transport costs, taxes, salaries, raw
materials, rental costs etc. are directly under the
influence of the location and can be 25% of the
purchase product price. When we summarise all costs,
the location may change the overall operating costs by
50%. Spatial circumstances affect the efficiency of the
industry, where some locations are better than others
for a specific production. A large number of decisions
have geographic (spatial) character, and finding a
winning formula for the selection of optimal industrial
location is the challenge for engineers and scientists.
Collection of information allows the generation of a
potential industrial locations, while the use of selection
criteria, through several iterations, gradually decreases
the selection (Fig. 1.) [13]. A large number of decision
alternatives [14] are one of the main characteristics in
industrial location analysis. In the region of interest,
there are usually many potential locations that could be
chosen for the facility. Bankhofer [6] suggests a two-
step approach starting with the selection of a macro-
location followed by the selection of a micro-location.
Within each step, theoretically feasible alternatives are
pre-selected (scanned). For those alternatives that have
passed the screening, conformity with minimum
requirements is checked before performing a more
detailed analysis. Analogy to Bankhofer, Autschbach
[15] divides the evaluation phase into country pre-
selection, rough analysis and detailed analysis of
alternatives. Goette [16] suggests a process consisting
of five phases: concept development, country pre-
selection, macro-analysis, micro-analysis and decision.
Identifying the optimal location for industry is a spatial
problem that requires comparison of the attributes of
different places, and finding the best fit location in a
place that has the most suitable combination of desired
attributes [17]. The power of Geographic Information
Systems to allow a decision maker to simultaneously
analyse geographic space and the information
(attributes) linked to the space. This function makes
Figure 1. Potential industrial location
IS'14
Rikalovic et al.
GIS an indispensable tool in solving complex spatial
problems such as industrial location.
Geographic Information Systems is a group of
procedures that provide data input, storage and
retrieval, mapping and spatial analysis for both spatial
and attribute data to support the decision-making
activities of the organization [18]. Geographical
information can be defined as geo-referenced data that
has been processed into a form that is meaningful to
the recipient decision-maker and which is of real or
perceived value in the decision-making process [19].
There are a number of different methods used to
analyses geographic data in GIS. There are methods of
analysis of geographic data and methods of analysis of
attribute data. The most commonly used are the GIS
spatial analysis [20]: analysis of attributive (tabular)
data, overlapping layers (i.e. query of spatial data),
distance analysis and nonparametric techniques such a
Multi-Criteria Decision Analysis (MCDA) [19], Genetic
Algorithms (GA) [4] etc. Analysis of attribute data of one
thematic layer can be performed: as SQL query against
a table with attribute data; using different arithmetic
operations (addition, subtraction, multiplication etc.),
logarithmic functions, trigonometric functions, multi-
criteria decision method, and methods based on
artificial intelligence. When we are speaking about
analysis of geographic data there are analysis
performed over the vector data and raster data [9].
GIS techniques & procedures have an important role in
analysing decision problems in a form of spatial
decision support system for industrial location analysis
especially in screening phase. In screening phase role
of GIS is to analyse feasible alternatives that will be
later consider in evaluation phase. In evaluation phase
the role of GIS is to produce suitability maps according
to the results from Multi-criteria decision analysis and
value judgments of decision makers [21].
Unfortunately, there are not enough scientific research
on spatial analysis in the industrial location filed.
Therefore, we represent spatial industrial location
analyzis made in GIS with examples.
Rikalovic et al.
3. THE ROLE OF GIS IN INDUSTRIAL
LOCATION ANALYSIS
The role of GIS in industrial location analysis is
irreplaceable in both screening phase and evolution
phase. In screening phase GIS is commonly used for
generating alternatives using application of arithmetic
and logical operations in the process of analysing
geographic data. The most commonly used arithmetic
function includes addition, subtraction, multiplication,
and division of each value in a single layer value from
the second layer. Logical operations are used for SQL
query (Fig. 2.) and retrieval of geographic data of those
where the specified conditions occur together [22]. In
this section we will give examples (study case of
Vojvodina) in industrial location micro-analysis
produced in ArcGIS.
Figure 2. SQL query
In the industrial location screening phase selecting the
industrial location based on search of potential locations
located near railway, highway and ports can be
achieved using "select by location" and "buffer"
analysis. In the example given in Fig. 3 was performed
search of available location in the industrial area
suitable for the construction of a production based on
the set of criteria that defines the distance from the
railway must not be greater than 1000 m.
Figure 3. Select by location
IS'14
301
Analysis of the buffer zone is used when it’s needed to
locate all locations that are in a zone (a distance) of the
observed object. In the example given in Fig. 4 we can
see buffer analysis for production locating. In presented
example we assume that the location must be in the
industrial areas and that the highway may be the most
distant 1 km from the potential location. Often such a
request is performed excluding all locations that are
further than 1 km from the highway, using common
ArcGIS function called "Buffering"
Figure 4. Buffer analysis
In the industrial location evaluation phase, a number of
multi-criteria evaluation methods have been used in the
GIS environment. The most commonly used analysis
are: Weighted Linear Combination (WLC), Ordered
Weighted Averaging (OWA), Analytical Hierarchical
Process (AHP) [23]. One of the most common
evaluation tool is “MCDA4ArcMap” [24] – An open
source multi-criteria decision analysis and geo-
visualization tool for ArcGIS for WLC and OWA analysis
in GIS environment.
The total score for each alternative is obtained by
multiplying the criteria weight assigned to each attribute
and then summing the products over all attributes. In
WLC analisis the scores are calculated for all of the
alternatives and then presented in the form of the
suitability map where red color is representing low
suitability and green high suitability alternatives
(locations) (Fig. 5.):
S   wi xi (1)
where S is suitability, wi is criteria weight i, and xi is the
criterion score of factor i.
Use of presented methodologies is possible for both
industrial micro-location and macro location analysis.
Precondition for efficient use of GIS in the industrial
location analysis is existence of functional spatial
database for micro-location and macro location
analysis. In building spatial database is extremely
important that the data be updated and relevant to a
particular industrial location problem.
302
Figure 5. WLC analysis in ArcGIS
4. CONCLUSIONS
This paper proposes use of GIS in industrial location
analysis. We introduced rool of GIS in the generating
alternatives (screening phase) and the evolution phase.
In screening phase we used application of arithmetic
and logical operations such as SQL query and buffer
analysis for generating alternatives. In the evaluation
phase we used multi-criteria decision analysis-
weighted linear combination under the GIS environment
for eveluation and ranking alternatives. In presented
examples we specifically focused on a micro location
analysis.
In further research the role of GIS will be shown in the
sevices location analysis.
5. REFERENCES
[1] Bhatnagara R., Sohalb S. A. (2005), “Supply chain
competitiveness: measuring the impact of location factors,
uncertainty and manufacturing practices”, Technovation, no. 25,
pp. 443–456.
[2] Church R. L., Murray T. A. (2008), Business Site Selection,
Location Analysis and GIS, Wiley, New Jersey, USA.
[3] Weber, A. (1929), Theory of the Location of Industries, The
University of Chicago Press, Chicago, USA.
[4] Wyat R., Hossain H. (2005), “A GIS-based, genetic algorithm for
addressing the facilities-location problem”, Proceedings of The
eighth international conference on computers in urban planning
and urban management. July; London: University College.
IS'14
View publication stats
Rikalovic et al.
[5] Malczewski J. (2004), “GIS-based land-use suitability analysis: a
critical overview”, Progress in Planning, Vol.62, No.1, pp. 3–65.
[6] Bankhofer U. (2001), Industrial site management, Deutscher
Universitäts-Verlag, Wiesbaden, Germany.
[7] Zelenovic D. (2003), The Design of Production Systems, 2nd
ed., Faculty of Technical Sciences, Novi Sad, Serbia.
[8] Worral L.(1991), Spatial Analysis and Spatial Policy using
Geographic Information Systems, Belhaven Press, London, UK.
[9] Eldrandaly K. (2007), “Expert Systems, GIS, and spatial decision
making: Current practices and new trends”, Expert Systems
Research Trends, pp. 207- 228.
[10] Gürder F., Yılmaz Y. (2012), “Geographic Information Systems
In Strategic Decision Making In Logistics Companies”,
International Journal of Business and social Research, Vol. 2,
No: 4, pp. 76-86.
[11] Bolstad, P. (2002), GIS Fundamentals, Eider Press, Minnesota,
USA.
[12] Heizer J. and Render B. (2011), Operations Management. 10th
ed., Prentice Hall, USA.
[13] Kotler, P.J., Haider, D.H., Rein, I. (1993), Marketing places:
Attracting investment, industry and tourism to cities, states and
nations, Free Press, New York, USA.
[14] Malczewski J. (1999), GIS and Multicriteria Decision Analysis,
Wiley, New York, USA.
[15] Autschbach J. (1997), International siting. Deutscher
Universitäts-Verlag, Wiesbaden, Germany.
[16] Goette T. (1994), Location policy of international companies,
Deutscher Universitäts-Verlag, Wiesbaden, Germany.
[17] Bose R., “A Model for Location Analysis of Industries”, available
at: available at: http://proceedings.esri.com/ library/userconf/
proc02/pap0449/p0449.htm, (accessed: 10 July 2014).
[18] Huang B. and Jiang B. (2002), AVTOP: A full integration of
TOPMODEL into GIS, Environmental Modelling & Software 17,
pp. 261–268.
[19] Malczewski J. (2004), “GIS-based land-use suitability analysis: a
critical overview,” Progress in Planning, Vol.62, No.1, pp. 3–65.
[20] Rikalović A., Ćosić Đ., Popov S., Lazarević Đ. (2013), “Spatial
multi-criteria decision analysis for industrial site selection: The
state of the art,” XI Balkan Conference on Operational Research-
Balcor, Belgrade.
[21] Rikalović A., Ćosić I., Lazarević Dj. (2014), “GIS Based Multi-
Criteria Analysis for Industrial Site Selection”, 24th DAAAM
International Symposium on Intelligent Manufacturing and
Automation, Procedia Engineering 69, pp.1054 – 1063.
[22] Jovanovic V., Djurdjev B., Srdic Z., Stankov U. (2012),
Geografski informacioni sistemi, Univerzitet u Novom Sadu, Novi
Sad, Serbia.
[23] Drobne S., Lisec A. (2009), “Multi-attribute Decision Analysis in
GIS: Weighted Linear Combination and Ordered Weighted
Averaging,” Informatica 33, pp. 459–474,
[24] C. Rinner, S. Voss, (2013), “MCDA4ArcMap – An Open-Source
Multi-Criteria Decision Analysis and Geovisualization Tool for
ArcGIS 10,” Feature Article, Cartouche, Newsletter of the
Canadian Cartographic Association, Number 86, Winter/Spring,
pp.12-13.