Full text: Small and Big Business

capital-output ratios in manufacturing, cannot be decided 
with confidence. 
As a special case in which some of these complex relations 
might be studied the problem of servicing machines may be 
mentioned. When a number of automatic loons are tended in 
common by a number of workers, the management wants to know 
which combination of numbers of men and of machines is most 
advantageous. This problem is solved by the methods of 
stochastic processes '; it appears that an increase in scale 
of operations up to a certain point yields better utilisation 
of both men and machines. This is a special example of the 
"principle of mossed reserves" (Sargent Florence) which has 
very wide applications in the field of inventories, cash 
holding etc. It is essentially a probabilistic problem and 
has to be dealt^by these methods. 
Evidence of the capital coefficient is still much too incom 
plete to clarify all the details. It is safe to state, 
hox/ever, that capital per man and scale of output increase 
jointly in the course of technical progress, and the inter 
relation of the throe elements is of great importance. 
Cf. C. 9$1m, The Distribution of Repairmen in Servicing 
Automatic IIochines (in Swedish) Industritidningen Norden 
Vol. 75CW7). 
W. Feller, Probability Theory and its Application. Vol. I. 
D.R. Cox and W.L. SmithJ Queues. London 1961, Chapter IVJ 
Machine Interference.

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