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Proceedigs of the 15th IFAC Symposium on Proceedigs of the 15th IFAC Symposium on Information Control Problems in Manufacturing Proceedigs the IFAC on Proceedigs of the 15th 15th IFAC Symposium Symposium on Information of Control Problems in Manufacturing Proceedigs of theOttawa, 15th IFAC Symposium on May 11-13, 2015. Canada Information Control Problems in Available online at www.sciencedirect.com Information Control Problems in Manufacturing Manufacturing May 11-13, 2015. Ottawa, Canada Information Control Problems in Manufacturing May 11-13, 11-13, 2015. 2015. Ottawa, Canada May Ottawa, Canada May 11-13, 2015. Ottawa, Canada ScienceDirect IFAC-PapersOnLine 48-3 (2015) 2362–2367 Optimal Optimal Allocation Allocation of of Public Public Service Service Centres Centres in in the the Central Central Places Places of of Functional Functional Optimal Allocation of Public Service Centres in the Central Places of Regions Optimal Allocation of Public ServiceRegions Centres in the Central Places of Functional Functional Regions Regions Samo Drobne*. Marija Bogataj** Samo Drobne*. Marija Bogataj** Samo Drobne*. Drobne*. Marija Marija Bogataj** Samo Bogataj** Bogataj** Samo Drobne*. Marija * Jamova * University University of of Ljubljana, Ljubljana, Faculty Faculty of of Civil Civil and and Geodetic Geodetic Engineering, Engineering, Jamova cesta cesta 2, 2, SI-1000 SI-1000 Ljubljana, Ljubljana, Slovenia Slovenia * of and Geodetic Engineering, Jamova cesta (Tel: +386 11 4768 e-mail: samo.drobne@ fgg.uni-lj.si). * University University of of Ljubljana, Ljubljana, Faculty Faculty of Civil Civil and649; Geodetic Engineering, Jamova cesta 2, 2, SI-1000 SI-1000 Ljubljana, Ljubljana, Slovenia Slovenia (Tel: +386 4768 649; e-mail: samo.drobne@ fgg.uni-lj.si). * University of Ljubljana, Faculty of Civil and Geodetic Engineering, Jamova cesta 2, SI-1000 Ljubljana, Slovenia (Tel: +386 11Studies, 4768 649; 649; e-mail: samo.drobne@ fgg.uni-lj.si). ** Advanced Vrtojba, Mednarodni prehod 6, SI-5290 Sempeter pri Gorici, Slovenia +386 4768 e-mail: samo.drobne@ fgg.uni-lj.si). ** Mediterranean Mediterranean Institute Institute for for(Tel: Advanced Studies, Vrtojba, Mednarodni prehod 6, SI-5290 Sempeter pri Gorici, Slovenia (Tel: +386 1 4768 649; e-mail: samo.drobne@ fgg.uni-lj.si). ** Mediterranean Mediterranean Institute Institute for for Advanced Advanced Studies,[email protected]). Vrtojba, Mednarodni Mednarodni prehod prehod 6, 6, SI-5290 SI-5290 Sempeter Sempeter pri pri Gorici, Gorici, Slovenia Slovenia (e-mail: ** Studies, Vrtojba, (e-mail: [email protected]). ** Mediterranean Institute for Advanced Studies,[email protected]). Vrtojba, Mednarodni prehod 6, SI-5290 Sempeter pri Gorici, Slovenia (e-mail: (e-mail: [email protected]). (e-mail: [email protected]). Abstract: Abstract: In In the the European European Union, Union, Member Member States States and and their their regions regions are are responsible responsible for for planning, planning, funding funding Abstract: In the the European European Union, Member States and their regions are responsible forHow planning, funding and administration of public services, which should be based also on smart city tools. smart is aa city Abstract: In Union, Member States and their regions are responsible for planning, funding and administration of public services, which should be based also on smart city tools. How smart is city Abstract: In the European Union, Member States responsible forHow planning, funding and administration ofalso public services, which shouldand be their basedregions also onare smart city tools. How smart actively is a city city could be evaluated by its ability to produce favorable conditions to get urban operators and administration of public services, which should be based also on smart city tools. smart is a could be evaluated also by its ability to produce favorable conditions to get urban operators actively and administration ofalso public services, which shoulddevelop be based also on smarttopublic city tools. How smart actively is a The city could be evaluated by to favorable conditions get operators involved spatial innovation dynamics, also innovative logistics networks. could be into evaluated by its its ability ability to produce produce favorablethe get urban urban operators actively involved into spatialalso innovation dynamics, also to to develop theconditions innovativeto public logistics networks. The could be evaluated also by its ability to produce favorable conditions to get urban operators actively involved into spatial innovation dynamics, also to develop the innovative public logistics networks. The method supports local authorities and state government’s decision optimal allocation of involved into spatial innovation develop the innovative publicon method presented presented supports localdynamics, authoritiesalso andto state government’s decision onlogistics optimalnetworks. allocationThe of involved into spatial innovation dynamics, also to state develop the method innovative public logistics networks. The method presented supports local authorities and government’s decision on optimal allocation of regionally based public services. The article is presenting the for optimal coverage of the state method presented supports local authorities and state government’s decision on optimal allocation of regionally based public services. The article is presenting the methoddecision for optimal coverageallocation of the state method presented supports local authorities and state government’s on optimal of regionally based public The is presenting the method for coverage of territory functional regions, smart is the and optimal of regionally based public services. services. The article article presenting theof method for optimal optimal of the the state state territory with with functional regions, where where smartiscity city is aa center center of the activities, activities, and coverage optimal allocation allocation of regionally based public services. The article presenting theof method forusing optimal coverage of the state territory with functional regions, where smartiscity city is aa center center the activities, activities, and optimal allocation allocation of services influence city growth. Sets of functional regions were modelled the Intramax method. An territory with functional regions, where smart is of the and optimal of services influence city growth. Sets of functional regions were modelled using the Intramax method. An territory with functional regions, where smart city is a center ofmodelled the where activities, and optimal allocation of services regionalization influence city growth. growth. Sets offunctional functional regions were using the Intramax Intramax method. An optimal on of regions is presented the number is services influence city Sets functional regions modelled using the method. An optimal regionalization on number number ofof functional regions iswere presented where the optimal optimal number is chosen chosen services influence city growth. Sets of functional regions were modelled using the Intramax method. An optimal regionalization on number of case functional regions is presented presented where the thefor optimal number is chosen chosen according to services. The study Slovenian regionalization eldercare is optimal regionalization number of functional regions is where optimal number is according to the the cost cost of of on services. The case study for for Slovenian regionalization for eldercare is presented. presented. optimal regionalization number of case functional regions is presented where thefor optimal number is chosen according to the the cost cost of of on services. The study for for Slovenian regionalization eldercare is presented. presented. according to services. The case study Slovenian regionalization for eldercare is Keywords: region, functional region, central place, optimal allocation, service, eldercare. © 2015, IFAC (International Federation of Automatic Control) Hosting byservice, Elsevierfor Ltd. All rights according toregion, the cost of services. The central case study foroptimal Slovenian regionalization eldercare is reserved. presented. Keywords: functional region, place, allocation, eldercare. Keywords: Keywords: region, region, functional functional region, region, central central place, place, optimal optimal allocation, allocation, service, service, eldercare. eldercare. Keywords: region, functional region, central place, optimal allocation, service, eldercare. Many Many researchers researchers (e.g. (e.g. Ball, Ball, 1980; 1980; Casado-Diaz, Casado-Diaz, 2000; 2000; 1. Many researchers researchers (e.g. Ball, 1980; Casado-Diaz, 2000; 1. INTRODUCTION INTRODUCTION Tomaney and Ward, 2000; Laan and Schalke, 2001; Andersen, Many (e.g. Ball, 1980; Casado-Diaz, 2000; Tomaney and Ward, 2000; Laan and Schalke, 2001; Andersen, 1. INTRODUCTION 1. INTRODUCTION Many researchers (e.g. Ball, 1980; Casado-Diaz, 2000; Tomaney and Ward, Ward, 2000; Laan and Schalke, 2001; Andersen, Andersen, 2002) showed already that the standard administrative regions Tomaney and 2000; Laan and Schalke, 2001; 1. INTRODUCTION 2002) showed already that Laan the standard administrative regions 1.1 Tomaney and Ward, 2000; and Schalke, 2001; Andersen, 1.1 Formal Formal political political region region and and functional functional region region 2002) showed showed already that the the standard standard administrative regions covering territory of Member States basic 2002) already that regions 1.1 Formal Formal political political region region and and functional functional region region covering territory of European European Memberadministrative States used used as as basic 1.1 2002) showed already that resource the standard administrative regions covering territory of European Member States used as basic 1.1 Formal political region and functional region entities for policy making, allocation, and research do covering territory of European Member States used as basic How smart is a city could be evaluated also by its ability to entities for policy making, resource allocation, and research do covering territory of European Member States used as basic How smart is a city could be evaluated also by its ability to not entities for policy making, resource allocation, and research do provide meaningful information on actual conditions of entities for policy making, resource allocation, and research doaa How smart is a city could be evaluated also by its ability to produce favourable conditions to get urban operators actively How smart is a city could be evaluated also by its ability to not provide meaningful information on actual conditions of entities for policy making, resource allocation, and research doa produce favourable conditions to get urban operators actively How smart is a city could be evaluated also by its ability to not provide meaningful information on actual conditions of particular areas. As such, there has been a move towards provide meaningful information on actual conditions of a produce favourable favourable conditions to get get urban operators operators actively not involved into spatial innovation dynamics, also to evaluate produce conditions to urban actively particular areas. As such, there hasonbeen a conditions move towards not provide meaningful information actual of a involved into spatial innovation dynamics, also to evaluate particular areas. As such, there has been aa move towards produce favourable tobeget urbaninoperators actively functional regions. A functional region is defined as a region particular areas. As such, there has been move towards involved intoservices spatialconditions innovation dynamics, alsocity to and evaluate which public are best to located the what involved into spatial innovation dynamics, also to evaluate functional areas. regions.AsA such, functional region is defined as atowards region particular there has been a move which public services are best to be located in the city and what involved intoservices spatial are innovation alsocity to and evaluate functional regions. A is as aa region by of and intrafunctional regions. A functional functional region region is defined defined as its region which public best to towhich bedynamics, located in the the what characterised is the functional will covered by which public services areregion best be located in city and what characterised by its its agglomeration agglomeration of activities activities and by by intrafunctional regions. A functional region is defined as its a region is the optimal optimal functional region which will be be covered by these these which public services are best to be located in the city and what characterised by its agglomeration of activities and by its intraregional transport, information and communication characterised by its agglomeration of activities and by its intrais the the optimal optimal functional region which will becentral covered by these these services. Different services in a city as a place of a is functional region which will be covered by regional transport, information and communication services. Different services in which a city will as abecentral place of a characterised by its agglomeration of activities and by its intra-a is the optimal functional region covered by these regional transport, information and communication infrastructure, facilitating production and services, therefore regional transport, information and communication services. Different services in a city as a central place of a region have different optimal size of services. Different services a city as aterritory central covered place ofby a infrastructure, facilitatinginformation production and therefore a regional transport, andservices, communication region have different optimalin of the the covered services. Different services inissize aunderstand city as aterritory central place ofby a large infrastructure, facilitating production and services, therefore a mobility of people, items in production processes and infrastructure, facilitating production and services, therefore region have different optimal size of the territory covered by them. While a formal region as an area having region have different optimal size of the territory covered by large mobility of people, items in production processes andaa them. While a formal optimal region issize understand as an area having infrastructure, facilitating production and within services, therefore region have different of the territory covered by large mobility of people, items in production processes and final products, but also enabling services its interaction large mobility of people, items in production processes and them. While a formal region is understand as an area having the characteristics (at one) also them. While a formal region is understand anwell-defined area having final products, but also enabling services within processes its interaction large mobility of people, items in production and the same same characteristics (at least least one) and and as also them. While a formalregion region isbased understand as anwell-defined area having final products, but also services borders, which is rarely well defined. final products, but also enabling enabling services within within its its interaction interaction the same characteristics (at least one) and also well-defined border, a functional is around something (local the same characteristics (at least one) and also well-defined borders, which is rarely well defined. final products, but also enabling services within its interaction border, a functional region isleast based around something (local borders, the same characteristics (at one) and also well-defined which is rarely well defined. which is rarely well defined. border, market functional region is based based around something (local borders, labour (LLM) areas, around their central border, aa functional region is around (local In society, the basic characteristic borders, which is rarely defined. labour market (LLM) areas, around theirsomething central places, places, border, aaround functional region is destination based around something (local In industrial industrial society, thewell basic characteristic of of aa functional functional labour market market (LLM) areas, around their central places, utilities sources or point, even pizza labour (LLM) areas, around their central places, In industrial society, the the basicmarket, characteristic ofintra-regional functional region is the integrated labour in which In industrial society, basic characteristic of aa functional utilities around sources or destination point, even pizza labour market (LLM) areas, around their central places, region is the integrated labour market, in which intra-regional utilities area around sources or destination destination point, area) evenand pizza In industrial society, the basicmarket, characteristic ofand a functional delivery can be understood as aa functional its utilities around sources or point, even pizza region is the integrated labour in which intra-regional commuting as well as intra-regional job search search region is the integrated labour market, in which intra-regional delivery area can be understood as functional area) and its well as intra-regional jobinsearch and search for for utilities around sources or destination point, even pizza delivery could area can befuzzy understood as aa functional functional area) and its commuting region is theas integrated labour market, which intra-regional borders be and changing in aa time horizon. delivery area can be understood as area) and its commuting as well as intra-regional job search and search labour demand is much more intensive than the inter-regional commuting as well as intra-regional job search and search for for borders could be fuzzy and changing in time horizon. delivery area can be understood as a functional area) and its labour demand is much more intensive than the inter-regional borders could be fuzzy and changing in a time horizon. commuting as well as intra-regional job search and search for Therefore, functional region an area that made up of borders could be fuzzy and is changing in a is time horizon. labour demand is much more intensive than the inter-regional counterparts. Consequently, the identification and delineation labour demand is much more intensive than the inter-regional Therefore, functional region is an area that is made up of counterparts. Consequently, the identification and delineation borders could be fuzzy and changing in a time horizon. Therefore, functional region is an area that is made up of labour demand is much more intensive than the inter-regional different e.g. communities, Therefore, functional spatial region units is an(ESUs, area that made up of counterparts. Consequently, the and delineation of are based of Consequently, the identification identification andconditions delineation different elementary elementary spatial units e.g.is communities, Therefore, functional region is and an(ESUs, area that is made upThe of counterparts. of functional functional regions regions are commonly commonly based on on the the conditions of different elementary spatial units (ESUs, e.g. communities, counterparts. Consequently, thethis identification and delineation municipalities) that are linked function as a unit. different elementary spatial units (ESUs, e.g. communities, of functional regions are commonly based on the conditions of local labour market. Based on perception, Smart (1974) functional regions are commonly based on theSmart conditions of municipalities) that are linked and(ESUs, function ascommunities, a unit. The of different elementary spatial units e.g. local labour market. Based on this perception, (1974) municipalities) that are linked and function as a unit. The of functional regions are commonly based on the conditions of participating ESUs could change in a time horizon. Functional municipalities) that are linked and function as a unit. The local labour market. Based on this perception, Smart (1974) delineated functional regions and this “industrial” approach is local labour market. Based on this perception, Smart (1974) participating ESUs could changeand in a function time horizon. Functional municipalities) that are linked as a unit. The delineated functional regions and this “industrial” approach is participating ESUs could could changeone in aa or timefew horizon. Functional local labour market. Based on this perception, Smart (1974) region is organized around central places. participating ESUs change in time horizon. Functional delineatedinfunctional functional regions and(OECD, this “industrial” “industrial” approach is accepted the recent literature 2002; Cörvers et al., delineated regions and this approach is region is organized around one or few central places. participating ESUs could change in a time horizon. Functional accepted in the recent literature (OECD, 2002; Cörvers et al., region is is on organized around one which or few few central places. delineated regions and(OECD, this “industrial” approach is Dependent number of functions, are concentrated in region organized around one or central places. accepted infunctional the recent recent literature 2002; Cörvers et al., al., 2009; Casado-Diaz and Coombes, 2011), while the economic accepted in the literature (OECD, 2002; Cörvers et Dependent on number of functions, which are concentrated in region is on organized around one which or few central places. Casado-Diaz andliterature Coombes, 2011),2002; whileCörvers the economic Dependent number of functions, are concentrated in 2009; accepted in the recent (OECD, et al., central places, such central places create a highly stratified Dependent on number of functions, which are concentrated in 2009; Casado-Diaz and Coombes, 2011), while the economic shocks like economic crises require Casado-Diaz and Coombes, 2011), thereconsider economic central places, such central places which create are a highly stratified Dependent on number of functions, concentrated in 2009; shocks like the the nowadays’ nowadays’ economic criseswhile require central places, places, such central places create highly stratified 2009; Casado-Diaz and Coombes, 2011), while thereconsider economic network of cities. Regarding economic and cohesion of central such central places create aasocial highly stratified shocks like the nowadays’ economic crises require reconsider the labour market perception. In the post-industrial society, shocks like the nowadays’ economic crises require reconsider network of cities. Regarding economic and social cohesion of the labour market perception. In thecrises post-industrial society, central places, such central places create asocial highly stratified network of cities. Regarding economic and cohesion of shocks like the nowadays’ economic require reconsider European Union (EU) regions, which are the main goal network of cities. Regarding economic and social cohesion of the labour market perception. In the post-industrial society, intensity of flows of workers and flows of items decline and the labour market perception. In the post-industrial society, European Union (EU) regions, which are the main goal of network ofSpatial cities. Development Regarding economic and social cohesion of intensity of flows of workers and flows of items decline and European Union (EU) regions, which are the main goal of the labour market perception. In the post-industrial society, Perspective (ESDP 1999), the European Union (EU) regions, which are the main goal of intensity of flows of workers and flows of items decline and services in a functional region is progressing. intensity of flows of workers and flows of items decline and European Spatial Development Perspective (ESDP 1999), the European Union (EU) regions, which are the main goal of intensity of services in a functional region is progressing. European Spatial Development Perspective (ESDP 1999), the intensity of flows of workers and flows of items decline and regional state-of-art and especially future development, must European Spatial Development Perspective (ESDP 1999), the intensity of services in a functional region is progressing. intensity of services in a functional region is progressing. regional state-of-art and especially future development, must European Spatial Development Perspective (ESDP 1999), the A number of regionalisation procedures for delineation regional state-of-art and especially future development, must intensity of services in a functional region is progressing. be studied as the base for further economic and political regional state-of-art and especially development, must A number of regionalisation procedures for delineation of of be studied as the base for furtherfuture economic and political regional state-of-art and especially future development, must A number of procedures forthedelineation of functional have suggested literature. A A number regions of regionalisation regionalisation be studied studied as the thethebase base for further further economic and political decisions. Here, regions became a subject of complex, be as for economic and political functional regions have been been procedures suggested in infor thedelineation literature. of A decisions. Here, the regions became a subject of complex, A number of regionalisation procedures for delineation of be studied as the base for further economic and political functional regions have been suggested in the literature. A recent review of different approaches and methods is in regions have been suggested in the literature. A decisions. Here, nonlinear the regions regions became atransparent subject of of functional complex, functional open, dynamic system of decisions. Here, the became a subject complex, recent review of different approaches and methods is in open, dynamic nonlinear system of transparent functional functional regions have been suggested in the literature. A decisions. Here, the regions became a subject of complex, recent review of different approaches and methods is in Casado-Diaz and Coombes (2011). Methods for delineation of review of different approaches and methods is in open, dynamic dynamic nonlinear system of transparent transparent functional recent connections between smaller and larger territorial areas. open, nonlinear system of functional Casado-Diaz and Coombes (2011). Methods formethods delineation of connections between smaller and larger territorial areas. recent review of different approaches and is in Casado-Diaz and (2011). Methods for of open, dynamic nonlinear of transparent functional functional regions can rule-based (Coombes et Casado-Diaz and Coombes Coombes (2011).into Methods for delineation delineation connections between smallersystem and larger larger territorial areas. areas. connections between smaller and territorial functional regions can be be divided divided rule-based (Coombes of et Casado-Diaz and Coombes (2011).into Methods for delineation connections between smaller and larger territorial areas. functional regions regions can be be divided divided into rule-based (Coombes of et functional can into rule-based (Coombes et functional regions can be divided into rule-based (Coombes et Copyright © 2015 IFAC 2436 2405-8963 © 2015, IFAC (International Federation of Automatic Control) Copyright 2015 IFAC 2436Hosting by Elsevier Ltd. All rights reserved. Copyright ©under 2015 responsibility IFAC 2436Control. Copyright 2015 IFAC 2436 Peer review© of International Federation of Automatic Copyright © 2015 IFAC 2436 10.1016/j.ifacol.2015.06.441 INCOM 2015 Samo Drobne et al. / IFAC-PapersOnLine 48-3 (2015) 2362–2367 May 11-13, 2015. Ottawa, Canada al., 1986; Coombes and Bond, 2008) and hierarchical methods (Smart, 1974; Masser and Brown, 1975, 1977; Masser and Scheurwater, 1980; Slater and Winchester 1978; Slater, 1981). There were developed several methods to determine functional areas/regions, that can be used for statistical purposes to analyse different aspects of labour market performance (Smart, 1974; Combes et al. 1986; Casado-Diaz, 2000; Van der Lann and Schalke, 2001; Newell and Papps, 2001; Karlsson and Olsson, 2006; Mitchell and Stimson, 2010; Landréa and Håkansson, 2013) and other socio-economic aspects (Green et al., 1986; Tomaney and Ward, 2000; Baum et al., 2008; Karlsson et al., 2008), to evaluate the administrative regions (Slater, 1976; Anderseen, 2002; Nel et al., 2008; Cörves et al., 2009), to analyse functional urban regions (Shimizu, 1975; Sykora and Muliček, 2009; Drobne et al., 2010; Manley, 2014), for analyses and applications of transport policy (Krygsman et al., 2009), to analyse housing market areas for housing policy (Goetgeluk and de Jong, 2007; Brown and Hincks, 2007), to analyse commodity market areas (Brown and Pitfield, 1990), to analyse telephone communication patterns (Fischer et al., 1993), to enhance economic development (Freshwater et al., 2013) – but only some of them have been developed for study the location problems and opportunities of services (Shortt et al., 2005; Drobne and Bogataj, 2014). The optimal delineation of functional regions for individual services or group of services has not been subject of scientific investigation. The location-allocation models which try to answer the question where optimally locating a set of facilities and how to allocate resources are part of colourful and ever growing body of literature also given in the review papers of Rahman and Smith (2000), Plastria (2001), Klose and Drexl (2005), Revelle and Eiselt (2005), Sahin and Süral (2007), Revelle et al. (2008), and Farahani et al. (2010). About optima location and allocation of services have wrote Harper et al. (2005), Mestre et al. (2015) and many other researchers. Specific problems of servicing elderly has been considered in Cromley and Shannon (1986), Johnson et al. (2005) and in others. However, as far as the authors know it, there is no literature that couples both problems: location-allocation problem of facility location and the problem of optimal delineation of the functional regions. In this paper a method for delineation of functional regions servicing elderly like developed by Drobne and Bogataj (2014) is coupled by a general location-allocation model for servicing in the functional regions on the special way using Intramax method. Here we are looking for such allocation of activities in the potential centres of functional regions, and delineation of these functional regions, that the costs of communication between city as a central place and other areas in the functional region, and other costs of services (including investments) would be minimal, when the functional regions are covering the area of a state as tessellations. 1.2 From the classical tradition of location theory to the post-industrial smart city Higher fix costs of public service activity A in a central place influence lower number of central places k an a broader territory of a country where A would be placed. Therefore, some “expensive” activities will find optimal location in less 2363 central places and some “cheaper” in more. Therefore, the tendencies of growth in modern city decline from the pure Tinbergen’s description of spatial allocation of production activities. Tinbergen (1968) explained how the smallest towns and villages produce certain goods, let us say type TYA goods. The next largest towns produce type TYA and TYB goods. They satisfy the demands of their own population and they export goods of TYB to smaller central places and villages. Larger towns manufacture three kinds of goods, TYA , TYB and T Y C for their own population, exporting T Y C and so on. The market area as a functional region of the goods is a result of the competition of spatial oligopoly of central places at different levels of centrality. If some central places of a certain level are stronger than others, their market area grows and attracts customers from other central places. Models of spatial games can describe this process, like presented by Bogataj and Usenik (2005). The authors also presented that the same competition appears in the strategic logistics of supply chains. Activity cells need to find an optimal level of central place to benefit the appropriate structure of human resources, subventions and other fiscal policies, and lower production or distribution costs. In post-industrial age among the factors influencing urban and regional growth, importance of services is growing and influence of production is declining. The answer to the question where to locate services, especially public services like schools, hospitals and eldercare is given in the next chapter, where and are subject of negotiation. 2. THE DELINEATION OF 21ST CENTURY LOCAL LABOUR MARKET AREAS AND FUNCTIONAL REGIONS 2.1 Intramax procedure To follow the ideas of functional regions as a local labour market areas (Casado-Diaz and Coombes, 2011), delineation could be made as described in the first part of this chapter. Let us consider the labour commuter as a person in employment whose territorial unit (ESU, e.g. community, municipality) of workplace is not the same as territorial unit of residence. To analyse functionally delineated regions as LLM areas, the groupings have been arranged using the Intramax method, which belongs to the methods of hierarchical clustering. Regionalisation procedures based on hierarchical clustering were initially developed in the 1970s and 1980s, and were introduced as alternatives to the more ad hoc methods. The methods include Markov chain techniques of Brown and Holmes (1971), as well as the strategy of Masser and Brown (1975, 1977) and Masser and Schuerwater (1980), which is based on refinements to Ward’s (1963) hierarchical aggregation procedures. The objective of the Intramax procedure is to maximise the proportion within the group interaction at each stage of the grouping process, while taking account of the variations in the row and column totals of the matrix. In the grouping process, two ESUs are grouped together, for which the objective function is maximised (Breukelman et al., 2009): 2437