The producing area is reduced in radius from 89 to 46.9 miles resulting 

 in a reduction of the distribution cost of $2.08 per ton. The total reduc- 

 tion amounts to $2.63 per ton. 



Increasing density from the 6.55 to 32.73-ton level requires a 

 doubling in mill size and output from 45,287 tons to 90,577 tons a year. 

 This reduces the average manufacturing cost by $.67 a ton. The poultry 

 producing area is reduced from a radius of 46.9 miles to 29.7 miles and 

 the average distribution cost is reduced by $.91 a ton. The total reduc- 

 tion is $1.58 a ton which is substantially less than the previous reduction. 



2. Short-Run Changes — In the short-run, while the firm is not 

 able to change plant size, substantial reduction in cost may be realized 

 by increasing density by dropping producers on the fringe and adding 

 producers close to the mill. Increasing density from 1.31 to 6.55 tons 

 reduces the distribution cost by amounts varying from $1.30 per ton for 

 Firm A to as much as $3.39 per ton for Firm E. Only 24 cents a ton then 

 separates the costs for Firms C. D. E. and F. 



Increasing density from the 6.55-ton to the 32.73-ton level provides 

 further reductions in cost varying from $.53 a ton for Firm A to a high 

 of $1.75 a ton for Firm F. The average costs of the three lowest cost 

 Firms D, E, and F. fall within a range of 34 cents. 



51 



