derived average cost curves for 10 model firms with poultry available 

 at the rate of 500 pounds per mile of truck travel. Similar sets of curves 

 can be derived for otlicr levels of volume per mile of truck travel. In 

 assembly operations, 100 percent of capacity can be exceeded only in 

 the short-run without adverse elfects on costs. The hauling capacity of 

 trucks (crates, birds) is an important limiting factor. Hence, in the 

 long-run, operation above 100 percent of capacity results in a discon- 

 tinuous average cost curve because additional equipment is required 

 or other costs increase sharply. ^^ 



When derived average cost curves for the series of model plants are 

 plotted in relation to percent of capacity, each successively larger plant 

 has an advantage over the next smaller unit. This is because unit costs 

 are successively lower, almost without exception, for each percentage 

 level as firm size increases. Relative advantages are generally minimized 

 at 100 percent of capacity, but widen below this level. 



The Influence of Volume Per Mile of Truck Travel 

 on Costs of Live Poultry Assembly 



Declining costs per pound of poultry assembled, associated with firm 

 size, result from changes in the number and size of vehicles, increased 

 labor efficiency, economies in management and facilities, larger flock 

 sizes, and a greater proportion of broilers hauled. Such factors often 

 can more than oflset the effects of increased total mileage per truck 

 and per firm as volume increases. Moreovei-, these savings can be sup- 

 plemented substantially by increasing the volume of poultry per mile 

 of travel. Thus, density of supplies, as well as absolute volume, is re- 

 lated to the achievement of miniunim costs in assembling live poultry. 



The density of the supply area and the average length of haul have 

 an important effect on costs. ^ ^ Figure 5 compares the curves computed 

 for selected levels of volume per mile of truck travel with actual aver- 

 age costs incurred by firms of various sizes under 1958-59 conditions. 

 Because of variations in use of capacity, input prices, and performance 

 levels as well as volume obtained per mile of truck travel, the curve 

 connecting the actual average costs cuts across several of the curves 

 representing costs with volume per mile of truck travel standardized. 

 This situation shows the greater degree of success already achieved by 

 larger assembly firms in reducing costs. Figure 5 also illustrates the 

 opportunities which may be open to assembly firms of a given size to 

 reduce costs through contractiiig the size of the supply area and reduc- 

 ing the average length of haul. 



Present firm size seems related to the relative cost reductions which 

 actual firms can realize through: (1) Increasing volume and adopting 



1^' Costs predicated upon 130 percent of capacity do not represent a sustained 

 level of operation. In the short run, 100 percent of capacity can be exceeded 

 without adverse effects by additional crates, placing more birds in each crate, or 

 handling birds of heavier wieght, if this can be accomplished \vithout exceeding 

 legal load limits. Hut the methods of projecting costs, described in the Appendix, 

 probably do not fully reflect the increased rates of use of inputs and the added 

 repairs which sustained heavier loading might necessitate, nor the costs of break- 

 downs during the operating week. 



'1 For purposes of this report, density of poultry production and pounds per mile 

 of truck travel are used interchangeably, 



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