the increasing unit labor cost overcomes the diminishing decrease in the 

 unit vehicle operating cost and the unit distribution cost commences to 

 increase. 



Further increases in volume and distribution of the volume by single 

 complements resvilts in an increasing distribution cost. Depending on 

 the density level, a volume is reached which cannot be delivered by a 

 single complement because of the restrictions imposed on the length of 

 the work day and crew size. Volumes in excess of this quantity must be 

 delivered by two complements. At the low density level, two comple- 

 ments are required for volumes in excess of approximately 30,000 chicks 

 a day and 9.0 million chicks a year. The distribution cost increases rap- 

 idly up to this volume and then increases moderately for further in- 

 creases in volume (Figure 5) . Hatchery F has a distribution cost of 0.236 

 cents per chick for delivering 34,800 chicks a day and 10.3 million chicks 

 a year. 



At the 1.491 density level, the cost function for volumes distributed 

 l)y a single complement intersects the function for volumes distributed 

 by two complements at approximately a volume of 43,000 chicks a day 

 and 13 million chicks a year. The distribution cost at this point is 0.134 

 cents per chick (Figure 5). With further increases in volume, the distri- 

 Ijution cost with two complements commences to decrease slightly. For 

 hatchery G distril)uting 52,200 chicks a day, six days a week and 15.47 

 million chicks a year, the distribution cost is 0.132 cents per chick (Fig- 

 ure 5 ) . Hatchery H distributing 69,600 chicks a day, six days a week and 

 20.63 million chicks a year has a distriliution cost of 0.128 cents per 

 chick. At this density level, any additional volume wovild probably re- 

 quire adding a third complement, and the distril)ution cost would com- 

 mence to increase. 



The intersection of the two distribution cost functions at the 

 7,455 chick density level occurs at approximately a volume of 52,200 

 chicks distributed a day which is the same volume as that handled by 

 Hatchery G. The distribution cost for this volume is 0.089 cents a chick. 

 The cost decreases slightly with additional volume to 0.086 cents a chick 

 for Hatchery H. Any additional volume would probably be distributed 

 at a slightly lower unit cost, but the cost would eventually increase as 

 more complements are required. 



A combination of factors explains the difference in direction of the 

 two complement cost functions. At the low density level, increasing 

 volume requires large increases in the size of the producing area. The 

 increases in travel and the restrictions used in developing the models in- 

 crease the distribvition cost more than any reductions in cost that accrue 

 from the added flexibility in conducting the distribution function with 

 two complements. At the two higher density levels, the effect of these 

 factors is reversed resulting in a declining distril>ution cost. 



Figure 6 illustrates the effect of increasing density on distribution 

 costs for the six hatcheries. Increasing density from 298 chicks to 1,491 

 chicks per square mile per year reduces distribution costs from a min- 

 imum of 15 percent for hatchery A to a maximum of 51 percent for 

 model F. Distribution costs are further reduced by increasing density 

 from 1,491 chicks to 7,455 chicks per square mile per year. The min- 

 imum reduction is 7 percent for hatchery A, and the maximum is 33 



41 



