over which birds need to be hauled. Similarly, as density of broiler pro- 

 duction increases for firms of the same size the assembly cost per pound 

 should decrease, because hauling distances will be reduced. 



These two characteristics of the broiler assembly operation — size 

 of assembly firms and density of broiler production — have independent 

 effects on broiler assembly costs. A cross-sectional analysis of the actual 

 assembly industry as was done in the previous study mentioned above 

 does not fully separate out these two characteristics. Yet, the net effect 

 of each on broiler assembly costs should be determined to provide deci- 

 sion-making data for assembly firm operations. 



A research method designed to accomplish this is the synthetic de- 

 velopment of model firms and their operation "on paper" to establish 

 costs. 3 This method is quite similar to that used ])y engineers in design- 

 ing buildings and plant layouts. In this report it consists of combining 

 the elements of the assembly function in a logical way to arrive at cost 

 descriptions of the model firms. Input requirement for the several phases 

 of the assembly function are developed separately. These input require- 

 ments are based on technical coefficients, such as laljor required to pick 

 up poultry. These coefficients are derived from several sources, particu- 

 larly surveys. Appropriate cost rates are then applied to the physical 

 input quantities to establish a function relating ovxtpul and costs. 



This research method is used for the following reasons: (1) each 

 firm is designed to handle a certain volume, (2) capacity as a concept is 

 kept constant between firms, (3) each firm uses the technology appro- 

 priate to its size, and (4) fixed element valuation in firms can be kept 

 consistent and not dependent on actual firm accounting procedures. 



By use of the synthetic method in this study of broiler assembly, 

 the results can be combined with those of the processing plant study 

 already completed.^ This will provide more complete information to 

 the industry than if each of these enterprises is considered separately. 



Assumptions and Conditions 



Six model assembly firms of various capacities were developed to 

 examine the effects on assemlily costs of changes in the characteristics 

 of firms. Records from 75 firms and information from equipment manu- 

 facturers and other sources helped determine organizational features, 

 facilities, equipment, and technical production coefficients for the model 

 firms. 



The model firms are considered to be independent firms or auto- 

 nomous divisions of firms carrying on other activities such as processing 

 broilers or distributing feed. The organization of each model firm in- 

 cludes management and office functions as well as the picking up and 

 hauling of poultry. Building space necessary to provide facilities for un- 

 loading and for crate storage is considered to be part of the processing 

 plants. Office space is assumed to be rented. 



3 This research method is described in R. G. Bressler, "Research Determination of 

 Economies of Scale," Journal of Farm Economics, Vol. XXVII, No. 3, August, 1945. 



4 G. B. Rogers and E. T. Bardwell, MARKETING NEW ENGLAND POULTRY, 

 2. Economies of Scale in Chicken Processing, University of New Hampshire, Agri- 

 cultural Experiment Station Bulletin No. 459, April, 1959. 



