Three simple steps to determine optimum plant capacity

Plant investment decisions are frequently crowded with folk-lore, even though basic economics may provide a ready guide to optimum capacity.Increasing emphasis on corporate accountability is producing the need to accept a more numerate approach to business decision taking while the overall scope for off-the-cuff decisions is rapidly diminishing. One important area of business decision taking concerns plant investment and in this paper an approximation routine is outlined for determining by economic analysis the optimum plant size for new ventures. Attention is also drawn to the importance of organization structure for investment planning.