Planning 



The long-run average costs of assembly and processing combined is 

 more vital information to entrepreneurs tban the costs of conducting 

 either of these marketing services separately. It is quite evident that 

 economies of scale do exist in processing, and that these economies are 

 not exhausted with current technology even at the 70 million pound per 

 year processing plant size. However, the results further indicate that the 

 entrepreneur must consider density of production and its effect on as- 

 sembly cost before deciding on the firm size with the least combined 

 cost. 



In an area producing only 1,000 pounds of broilers per square mile 

 per year the entrepreneur should consider that least cost, not including 

 his own income, is achieved with combined facilities at a capacity of 

 about 25 million pounds per year. Additional volume for this entrepre- 

 neur with no increase in density might well come from a set of duplicate 

 assembly and processing facilities at some location where they are not in 

 competition with the first set of facilities. However, the level of entre- 

 preneurial income demanded will also influence optimum firm size. An 

 entrepreneur demanding $20,000 annual income will find that at this 

 low density level the optimum sized operation for him is at about 35 

 million pounds. (See Table 8). This is further illustrated in Figure 12 

 for the 5,000 pound density level. As entrepreneurial income increases 

 the slope of the curve at any firm size is steeper. 



Production density as used in this study refers to the density faced 

 by an individual firm, not the density of the whole area from which that 

 firm oljtains its supply. However, the broiler industry is highly dynamic 



Table 8. Average Cost of Entrepreneur at Each Plant Size Assuming 

 $20,000 and $50,000 Annual Entrepreneurial Payment and Long-Run 

 Average Costs of Processing, Assembly, and Entrepreneur Combined. 



36 



