What does production radious mean?

There is a parameter called production radious / area with a slide bar from 1 to 10. What does that do?

It is weight.aka how heavily they should focus on producing that type of item.
If you have 2 different item A and B and you set A to 10 and B to 1 they will make 10 A and 1 B on average.

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Thanks for explaining