I have 50k points in a feature class which I need to build convex hull or polygon for each set of 50 points that are nearby each other. I guess the question is very similar to create census areas for each 200 households. I've tried all tools in ArcGIS Desktop 10.1 but none of them does what I'm after. I also tried some other third-party tools which allows me to create convex hull based on K-means algorithm - means I can specify the number of convex hulls to be generated but still can't see how to create convex hulls for a specified number of points. I'm open to any solutions not just limited to ArcGIS, but the final result need to be imported back to ArcGIS. Any advise would be appreciated! Thanks.
It seems to me you would be better with two types of analysis at different scales.
1) Identify larger groupings, e.g. 2 to 4 hundred hydrants for teams of individuals, perhaps using one vehicle to get to one area of the city. A cluster algorithm could do this easily enough e.g. http://edndoc.esri.com/arcobjects/8.3/default.asp?url=/arcobjects/8.3/Samples/Analysis%20and%20Visualization/Cluster%20Analysis/ClusterAnalysis.htm
2) Next use network analysis on each subcluster to assign hydrants to individual inspectors, otherwise you may find individuals are assigned one hydrant that is close as the crow flies but time consuming to reach because its on the other side of the block or river etc.