Food-Processing-Plant-Design-layout

Food Processing Plant Design & layout
operating level for a plant. If we assume that under these conditions the plant's costs are
given by a linear total cost function, as in Fig 11.5, then the average unit cost is simply given
by
fig 11.5 Atotal cost function
In this situation the more one produces, the lower the average unit cost. This phenomenon
is so important that it is given the name "economics of mass production" and forms the
entire basis of much of the industrial development. The simple linear cost function leads to
the conclusion that production may be increased indefinitely, always with the result of
lowering average unit cost. Recalling that the plant and production process is being held
substantially constant, this conclusion does not appear realistic. As one tries to obtain more
and more production from the plant, the facilities are strained to their limit, expensive
overtime operation seems necessary, scrap may increase, maintenance may be neglected
and average cost may go up (Fig 11.6).
Fig 11.6 an average cost function
This would have been noted, one has assumed a somewhat more realistic total cost
function, such as
TC (D) = FC + v1 D + v2 D2
In this case average cost is given by
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