In GTA-IV this has been slightly changed. To prevent display glitches make sure that the objects or at least their pivots of both (LOD and normal model) are placed near to each other.(example for GTA-IV: 69 would indicate that the LOD model is placed on the map at line 69). The LOD index value for a non-LOD object defines the instance entry/line of an object which should be used as the LOD object.
Each line (or entry for binary file formats like binary IPLs or WPL/XPL) gets an index starting with 0 which represents the first line and increasing by one with each entry. In GTA San Andreas and GTA IV LODs are linked within an indexing system. The LOD collision should be the same size as the original model's but with nothing in it. The LOD models have the same name as the original model, except the first three letters of the LOD model are replaced by the letters ' LOD.' Create an LOD version of the collision model of the original model.
However larger amounts can consume more memory. The draw distance of the original object can be of any amount. In the IDE file, the draw distance of the LOD object should be 301-3000 units.
LODs are created by creating a lower-detailed version of the original model by reducing the number of polygons, reducing extra details and lowering the definition and detail of its textures.