larger) coni[)etitors; (2) by explaining the reasons for the present cost 

 structure. 



However, the cost levels in this chapter are not necessarily "pure 

 costs," as derived from a rigorous study of the relationship of size of 

 firm to average costs, and the level of costs might be reduced somewhat 

 by a more microscopic approach, particularly in terms of labor input- 

 output relationships. These differences occur because the assumptions 

 one would make under a rigorous size-cost study would not l)e identical 

 with the procedure employed in the analysis in this chapter. Yet, the 

 use of observed relationships as a basis of projecting what a firm might 

 experience seems realistic and appropriate. In other words, while this 

 analysis does standardize some factors, some beterogeniety remains. For 

 example, this analysis does standardize firm size, as would be done in 

 selecting model firms for a synthetic cost study. In contrast, flock size 

 and crew size are allowed to increase with increasing firm size, as they 

 were found to do among existing firms. In a more restricted analysis 

 flock size and crew size might be standardized for all firm sizes. How- 

 ever, the use of these looser assumptions is believed to be more typical 

 of the conditions which firms have and would still encounter in increas- 

 ing volume from given levels. Thus, the objectives of this analysis are 

 distinctly different from those of a more rigorous study and the assump- 

 tions used are varied accordingly. 



The resulting analysis is expressed first in terms of the relationship 

 between firm size and costs per unit of product for selected average 

 lengths of haul. Other factors are varied with size, on the basis of ob- 

 served practices and relationships. These include: truck size, crew size, 

 labor input-output functions, flock size, and the percentages of broilers 

 and fowl handled. Because of the aggregative nature of the original data, 

 it is impossible to separate out the precise effects of each of these fac- 

 tors on costs. 



Secondly, since the assumptions of given volumes, given truck sizes, 

 and given lengths of haul result in sets of observations where volume 

 per mile of truck travel mav varv. the best levels of performance were 

 selected for each of several levels of volume per mile of truck travel 

 in order to standardize this factor. These relationships are then used 

 to examine the effects of: fa) Holding volume constant, but obtaining 

 it from shorter or longer average lengths of haul: (b) increasing vol- 

 ume while holding average length of haul constant: and, (c) changing 

 both volume and average length of haul. 



The results from making adjustments relating primarily to total 

 volume and volume per mile of truck travel may be viewed in two ways. 

 First, given a supply of specified quality, quantitv. and geographical 

 location, how could assembly costs be minimized if a number of firms 

 of discreet sizes and types constituted the alternatives? Secondly, if a 

 firm of particular size and type was able to overcome institutionalized 

 restrictions and change to another size and type, what would the re- 

 sults be in terms of costs? 



Data were adjusted to standardize levels of operation, prices of inputs, 

 weights per bird, volume of poultrv per mile of truck travel, travel 

 time for specific lengths of haul, and equipment and practices. The re- 

 sults of the survey of 75 firms assembling live poultry in New England 

 were used to determine progressive changes, with increasing firm size. 



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