Limitations of Gravity Model

Even though the gravity model is easy to imderstand and the iterative method is easy to implement on a spread sheet, there are limitations in the model s applicability. Listed in the following are few of its limitations  

Fixed facility costs are ignored or assumed to be the same irrespective of the location. 

Shipping costs are assumed to be linear with the distance. As discussed in Chapter 4, freight rates are nonlinear with fixed and variable cost that depend on the volume shipped. 

Euclidean distance metric (straight line route) is an approximation, since the road network is rectilinear. However, conversion factors are available for U.S. infercity transporf nefwork. 

The entire demand for a region is assumed to occur at a particular coordinate. Unless the region is very small, this is not accurate for estimating the distribution cost to the region. 

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