Evaluating Economy of Scale

It is normal for a unit of capacity in a large plant to cost less than a unit of capacity in a small plant; this is economy of scale. The exponent of the cost relation commonly known as "the six-tenths rule" indicates the magnitude of the economy of scale for treatment plants, treatment pr...

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Bibliographic Details
Published in:Journal - Water Pollution Control Federation 1972-11, Vol.44 (11), p.2111-2119
Main Author: Berthouex, Paul M.
Format: Article
Language:English
Subjects:
Capacity costs
Cost estimates
Design capacity
Economic costs
Economic value
Economies of scale
Minimization of cost
Total costs
Total systems
Unit costs
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Summary:It is normal for a unit of capacity in a large plant to cost less than a unit of capacity in a small plant; this is economy of scale. The exponent of the cost relation commonly known as "the six-tenths rule" indicates the magnitude of the economy of scale for treatment plants, treatment processing units, and process equipment. As M decreases, there are greater savings associated with building large units. This exponent can be used to aid in selection of design capacity, scaling up process cost estimates, estimating economy of scale in composite systems, and analyzing installations requiring multiple units.
ISSN:0043-1303