• No results found

The result, 10.97 is the total cost at the 4m level Average cost

of approximately

1 .5

millions output.

The questi on arises immediately; if there is such an advantage in terms of c ost , by curtailing marginal suppli ers , why is this not practised more? The answer appears to lie in the fact, that this curtailment is happening - not deliberately in most cases ,

(

although many factories insist

on frontier suppl iers bringing their cream to a suitable loading point

)

-

it is happening largely in the process of time . Supplier density is increasing all the time , and this has the indirect e ffect of offsetting the high haulage rates which arise from collecting relative� small offerings from marginal suppliers .

The average cost of hauling cream is greater than that of t otal wages , but in the course of time , wages tend to increase and that of transport tends to decrease largely due to greater supplier intensity which offsets the e ffect of distant marginal suppliers.

4.8

It is this process, together wi th the

practice of contracting out the cartage of marginal cream, that has enabled transport costs to decline through time.

In

every instance where managers have declined to operate beyond a certain distance from the factory

(

although

accepting cream at the supplier ' s expense

)

, cream haulage costs have been

kept at a lower level than unit wage costs , thus indicating economic efficiency has operated in that haulage costs have been substituted for other factor costs .

An analysis of the relationship between wages and haulage costs c onfirrre this. Some

23

factories

(

of

90

examined

)

had cream haulage unit costs under

70

per cent of those of wege costs , while

23

factories had haulage costs in

excess of

1 30

per cent of unit wage costs. Of the first

23 (

low haulage cost grrup

)

,

1 3

factories lifted cream from within a

1 5

mile radius and only

4

exceeded a

30

mile radiuso Of the

23

high-cost group,

1 5

factories exceeded

30

miles , and

8

exceeded

1 5 miles from the factory.

Of the smaller fact o ries

(up to

2

million lbs. output

)

, 44 per cent had no supplier more than 1 5 miles from the fac tory and 44 per cent had costs under 70 per cent of wage co sts.

48

The decline is relative to total costs . In one factory where condit­ ions were relative� stable , and output over

20

years varied between

5

to 6 million lbso per year, wages increased :f'rom

1 0

to

1 7

per cent, while Cream Haulage Total Costs decreased from

20

to 1 6 per cent for the same·period.

(1 931 -1 950) .

Of th� larger factories (exceeding 6 million lbs. output) , 67 per cent had suppliers in excess of 30 miles from the factory, all of which had haulage costs higher than wages costs ( of which

37)�

exc eeded

130;6

of the wage costs ) .

Generally spe aking, where one-half of the cream was lifted within

7.5

miles from the fR.ctory, cream costs were lower than unit wage costs, but where one-half of the cream exceeded

7o5

miles , unit haulage costs exceeded

wnge co sts proportionately as the

50

per-cent-point increased in distance

from the factory. 49

Other factors The main elements in cream

haulage co 3ts are weight, mileage and tine. From a theoretical point of view, weight asswnes a peculiar function in that it is not diss imilar to a kind of

" fixed" element in cost, whereas mileage and time ca...'1 be compared to "variable" ·elements. While haulage costs would be meaningless without weight, from a

point of viP.,., addi tion.3� weight adds very little to total costs over

a given

fixed

route. Tha t is , a large part of haulage costs will be involved

even if no cream were lifted at all , for the fixed expenses would be the same

A1ld the variable expenses would be slightly less only.

Some 26 factories which used their �vn vehicles exclusively were examined for cost of transport data . These factories were carefully selected as repre­

sentative of' the entire range of output and terrain over which collection may be made. The relevant datA is shrnvn in the follm� table : -

49

�ee the data given in Table XXX (p. 1 44) , where some of the highest (best) petrol c a1sumption data occurred when the loads were the

heaviest , and worst when the loads were lightest. Reading conditions affected petrol consumption more than loads.

TABLE XXXII. D. __ . . .. ,. . .. �

RELATIONSHIP BET\{i';EN .. TD ·E1 .EIGHT !UID CO:JT OF DA'.r A

--

OF FACTORIES 'rHE SK� :JON

.

of

No�

.P..:;rer;·,.··e

. . ;;ir·llt

ere·

•jj} lifted

____ ... . �E>. .J----· - ---'-- ""· Ne:i.. ht

.'cV"era

·re Avo An.n& '\.vG UP.it Unit

f'�:,ctor- of ere :l!H lifted ··nnu·�·� · cost

_£?._; ;t

T 'OOOs

---

('OOOs

!b2:

ies

lb.s . )

___ ...._ mile::: .-re

ad-

Cost.<:> £ .. £. d.

.££_

d.c

(1 )

(2)

(3 )

(4)

(5 )

(6)

(7)

(8)

(9)

Up to

2,000

5

131 1

24, 934

52

636

1 41 6 o.6o1

0 . 1 97

2001

-

4,000

4

3235

49,406

68

1 lf-1 8

3281

O o 650

Oc

5

2

7

4001

-

6,000

4

4390

66 , 21 0

67

2260

4455

0. 606

o. 66o

6001

-

9,000

4

821 4

97

, B21�o 84. )281

6

374 O .. l,.76 0. 976 9001

- 1 2,000

3

(

9273

1 1 2 ,4.87

83

3701

7204 0.462

1 .071

1 2001 Qv . . L� 1 8,000

3

1 l;..:l

529

1 50,767

97

5

147

1 1 , 1 5 8

0.408

1 .479

1 8�000

3

23 ,

089

1 66, 1 67

1 39

67C,8

1 6 ,361

0

.. 426 2o71 2 Column

(

1

)

"hems cl.'l s:·.:-interv8ls of crr-·::•m lifted to the nearest 1 000 lbs . ColUIJin

(3)

sho1N:'.l the wt::ighted l':!Ver:·,�e of Column (1

)

., Thus in the first class-interval five :f'::Jctories lifting up to two million lbs o of crr·.r.m <trr ·

recorded,.

The cl� s s-interv· :l�' of Colw:m ( 1 ) progr·" � ; s in heterogeneou�1 interv:-:..ls in order to bring out the p;;.ttern of rel atiom:hips morr::· clo::;P.ly$ 'rhu.'<· ·re:r-E:

9 or

1 0

fnctorie s in the: l r1 8 t c b ss-int•':rY<-�.1 !ihich might h:·vc been include:d

but w er·e deleted beca.l\::J e

o

f doub t "lbout cert::Jin de::tails . ;;'hen ex&mined .sep<::r­

<·tely,

hmrever, their averP.ce figures c".pproxima.ted very closely those of tbe

.:tbove t�ble in .:;very resp,�ct .,

Column

(�.)

shov·1s the weighted :t'i!er:;.ge .mnua.l mileEJgr-: run on cre aw collection. Column

(5 )

is � co-efficient or ratio computed as Colu111n Colwnn t4) ..

()J.

Thi.·. r(" tio i::; .-

,

·n•::a. ll''r. vf th( m:illber of lbs . of cre• •m lift "":d per ·lil-:;; and is an indicator of the inde}?endent V8.ria.ble, weight., The greater this co-aef'ficient , the lov.cr shoulCJ. be the unit cos t

(oth,_r

th:L."lgs beins

equ.:,�).

Coltunn

(6)

shov>s the weighted average "'nnua.l .�age-bill 8 lloca.tE:d to creto.m hauh,ge and is �) relative l11.".: 8.sure of Time consumed on cre2.m collectiono

C olur.nn

(7) shCI'NS

the ''veighted average of the am:ua.l cre:::>rn collection co.sts s It includes the Clatn of Colwm;

(6)

and tot:::·l truck h2.ulnge co sts . Column

(8)

i�:; the weighted average of unit cream collectior' costs in ter.rns of pence per lbo

B/F.

Colu:�m

(9)

is a derh•.s tive of Colunm

(i'l)

:md Colw rn

(3 ) ..

It assumes

e. constant average weight of cn:-am lifted of

4,000,000

lbs., per znnum. In

the first cle.S (">"""intcrval in C olWilll.

(.3)

1 1 ,31 1 , 000 lbs . of cret:·m were lifted. been lifted, then

ob,;i.cusly·

the [�verage Ibd the hypothetical 4-, ooo, ooo lbs.

unit cost vtould have been '�.ooo of 0 , 601 , i. e. 0., 1 97d,. ""' �o CoJ.t;lr.n

(9 )

unm:::..sk!: the real efficiency of cream c ol lec tion of the larger fActories . It puts

all f:,1ctories on the S8ffie basis B S ree;::;rds wei��ht of cref.'m

-

in other words 1

i t holds the V8 ria.ble element of "weight11 (:onstant, and this tends to reduce unit c o1:te for· low-ont:rut f;:;ctories , ,"1•1rl inoreo se u..rrlt costs for high-output

factorie s

(as

revealed in. Column

(5) )

. It should be observed here , that

there wa.s consider1:.ble dispersion cf all indiv·i

d

ual observations from the

me:n n of the class-intel"V::Jls,. This dispe:c2ion WP. S quite mt:.rked

when

the ir"d1.- 1 o.L' s .1. .. 1. (r.:, ') -.� o -:: (;e � .. d 2 eo l t l 1mn

(0)

.,� , a nd th ose o

(4)

agrdnst Column

(8)

and Column

(7)

�:tgainst Columns

(8)

o�c·

(9) .

In fac t ,

th e only sc.,.,tter d.i�Er1'l:rn v;hich sJ1owed 2n;y· <<.p:parent rel at i onship, w:� :o thn t

obt:d.ned froH: plottin£ tl::·e indiviCiur:,ls of Colurrn.s

(4)

::>nd

(7) .

Here 'l ,;-.;:·rkecl

tre: 1Cl c:f clc :'Ocly clt:.ste:ring dot[: w::; s observed up to abcut 1 01000 , 000 lbe .

of

cream, and this contirrc1ea in a more di s.persed Vi8Y with incre,<J seo poundage :.md ccsts. It denoted a marked relationship between rrdlez.ge and t otal costs .

By aY6r<J.gin.g

the::oe individuols , other r·elation:;hi:p:: c :_;.n be ob�:er1Nd . �o

:f

·rhis

must .s.sswnt.'; other things held equal

-

the s Gme dist�mce covered ,

and the takf;l1 tjJi;8., GiY· \': G fleet of truck:� , cream h<?.Ul:::ge

cc 2.tc· e.r� Q.erivative of rd.le2g� , time ;md vtc·ight. l•'!ilease nnC. time

8re the b·.ro v.:•riables nffecting the d ispersion of cosh� nv.:-stlyG

We:i.ght tends to be a const<:!nt.. It

tz.ke;!; just as

W<�rv i:-J.les ��nd time

to coll e c t

1 00

c.9 cont::J ining 1 0 l'bs . of cream

a.s

1 CO cans contain­

in&::; 20 or

50 lbs

.. of cream

(

a�;suming the cans to be in identical

plC�ce:=:

etc.) .

But

obviously the

30

lbs. cons will shmv unit co st1::

just

one-thin:l of those '"·ith 1 0 l'o::;c �.,�eh .. 'Unit co:c: b:: cBmouflage

efficiency. If TM.ny large f<-lctcries suddenly had their roun<lage cc.rt by one h;,lf, tL�? ir unit ,;o�t�; v,'ould aouble. Yet there :::;re; f"'ctories

':·•i th .3 r, output of approxiJr�?,tely 500 tons covering er. collection are2.

identi.c2.l in si z�� , nrea r:md di sp."rsion �l ;': :;ome f.<wtories 1dth 5· 1000 tons output, <·.t le.1� tbrcn r3.ouble tb; u:ut �:o:o: to C ol umn 9 iE l1s eful

<� s i nd icating th<· ·ua.gni tud '' of thi c han � P. , but p ract i c o.lly tr:nd :J tc

There is a steady increase in the density of cream lifted

(

see Column

(5 ) ) .

This should not be interpreted as meaning that small factories pick

up about one-half the quantity of cream per mile ,

(

for example

)

of those in the second last class-interval . This would be so if we could assume constant density per mile for each mile out from the factor,y. Quite a number of the larger factories picked up well over

1 , 000,000

lbs . of butterfat within the first five mile radius . A few picked up well over three million pounds of fat. The smaller factories picked up in the vicinity of

200 1000

to

300,000

lbs. of fat, while medi�sized factories were often pressed to reach the half-million lbs . r.oark. That is, the fat a.ensity ratio is about 1 : 8 between the SID2cllest and largest factories for the first few miles . However, larger factories extend out relatively much further than small fact ories and tend to go con.Siderable distances to pick up the last 1 0 to 20 per cent of their cream, otherwise their weight-distance co-efficient would be even larger.

The relati onship between

Columns

(6)

and

(7)

is fairly constant, but there is an int eresting relationship between Columns

(4)

and

(6) .

Column

(4)

measures time indirectly,

(

in hours

)

for if mileage given is divided by

1 5 ,

we ha.ve an approximate measure o f tiloo taken away from the factory on cream colle.otion. Colwnn

(6)

measures time paid for, whether consumed on cream haul­ age or not. For example , in the first class-interval,

24, 934

miles at

1 5

m.p.h.

indicates approximately 1 662

hours were taken on cream collection, which, when divided. into the aggregate average Wages, yields roug

hly 7/6

per hour. Taking penal rates of pay into consideration, this

me

ans one-tr.drd of time of drivers

is not on cream collection. However, as scale increases , it is clear that

these hourly rates tend to increase s o that in the sec ond last interval

(

for .

51

example

)

, approximately

1 0, 000

hours receive roughly

£,5 ,000

o r

1 0/-

per hour.

51'·

·This is based. on the fact that the average driver with penal rates earned approximately

£520

per annum or

57-

per hour. Depreciation

of drivers ' accommodation was charged in with wages occasional�,

but apart

fran

this exception it shows that one-third to one-half of the dri vera • time would appear to be engaged

in

truck maintenance , assisting unloading or loading o r other duties which � o r � not rightly be considered " ore.am-colleotion" c osts.

Another important relationship is that of Total Costs (Column

(?) ) to

Download now "Efficiency in producti..."

Outline

Related documents