Figure 9. Broiler Assembly Costs at Various Production Density Levels. 



.20- 



1.00 

 ■a 



c 



o 



Q. 



S..80 



if) 



"c 

 a> 

 o 



.60 



O 

 o 



^ .40 



Vt 

 10 



< 



.20 



4 8 12 16 20 24 



Production density— pounds per square mile per year (1,000) 



rates over their lower mileage levels and then rise at decreasing rates. 

 This behavior of the cost-mileage relationship as distance increases 

 means that the marginal or additional cost of going one more mile ini- 

 tially increases and then decreases. 



Application of linear regression to the cost-distance data for all 

 three density situations combined results in the following equation: 



A = 0.511 + 0.00809 M 



A =r assembly cost in cents per pound 



M = road miles between plant and impound point 



This means that for every pound of live broiler hauled there is an ini- 

 tial cost of one-half cent plus about eight-thousandths of a cent for each 

 additional mile hauled. This latter is the marginal cost per mile for 

 each pound hauled. The coefficient of correlation is 0.984, meaning the 

 straight line fits the points almost exactly. 



This equation can be quite valuable to a hauling firm in determin- 

 ing the cost of moving poultry over certain distances, regardless of the 

 production density situation. Assume an assembler has the opportunity 

 to shift from one producer located 60 miles from the plant to one 

 located only 40 miles from the plant and that one 220 crate truck load 

 of birds is involved (11,550 pounds). The 60 mile trip costs him: 



Cost = (11.550 X .511c) + (11,550 x .00809c x 60) 

 = $59.02 + S56.06 = $115.08 



31 



