2^/^ ton trucks plus a tractor-trailer or plus two 2 ton trucks. But if its 

 volume is expanded to a level of 35 million pounds annually, it might 

 replace the tractor-trailer (or the two 2 ton trucks) with 2 trucks of 

 the 21/^ ton size, or move to six 3 ton trucks. 



Economies in truck ownership and operation can he ohtained hy: (1) 

 Minimizing the total numher of trucks owned; (2) maximizing the 

 percentage of capacity at which each is operated; and, (3) minimizing 

 the numher of vehicles required to load out the average size of flock 

 in order to restrict the numher of stops per vehicle per trip and the 

 num])er of partial loads. However, the volume level at which the mini- 

 mum cost per pound for truck ownership and operation is achieved may 

 not coincide with the low-cost point for the firm. 



The lahor prohlems of the assemhly firm involve: (1) Minimizing 

 crew size, if workers regard pickup work as of inferior "status" and are 

 difficult to ohtain and retain; (2) minimizing the amount of overtime 

 wages; (3) moving the field crew, other than those who accompany 

 trucks, most expeditiously; and (4) maximizing the output per man- 

 hour. 



Unless one or more of the preceding situations is restrictive, the com- 

 hination of resources and inputs that will minimize the total per pound 

 cost at any given volume level takes precedence. Least-cost points for 

 the specific ohjectives rarely coincide. In studying cost reduction possi- 

 hilities, the relative importance of specific ohjectives in the decision- 

 making process of the firm is likely to differ in the long-run from that 

 in the short-run. (See Chapter II for a discussion of actual costs and 

 the reasons therefore.) 



Importance of Cost Group in Producing Cost Reductions 



Costs incurred in live poultry assemhly can he segregated, according 

 to their behavior as volume increases, into three main groups. These 

 are, in order of importance: lahor, truck costs, and management and 

 facility costs. 



Lahor costs per pound of poultry decline as volume increases. The 

 lower per pound costs result from the use of larger crews, increased 

 specialization, minimization of in-field travel hy crews through the use 

 of supplementary vehicles, and handling flocks of larger average size. 

 The precise effects of each of these factors are not ascertainable under 

 the methods used. 



Labor is the single largest cost in assembling live poultry. It accounts 

 for 60 to 67 percent of total costs per pound. The share of total unit 

 costs represented by labor declines as volume increases. This occurs 

 because savings from increased labor productivity continue well beyond 

 the volume levels where per pound costs for truck ownership and oper- 

 ation level off. But at any one volume level, the proportion of total per 

 pound costs represented by labor increases as annual mileage per truck 

 or per pound increases. This results from the increase in the ratio of 

 travel time to work time and from the greater effect of overtime wage 

 rates. 



Appendix Tables X and XI show the unit costs which resulted for 

 selected combinations of trucks and other resources as mileage per 

 truck and total volume increased. Appendix Table XTI indicates the 

 truck sizes used in cost projections and the costs for truck ownership and 



29 



