Full text: Small and Big Business

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 looms are tended in 
common by a number of workers, the management wants to know 
which combinations 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 massed 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 with by these methods. 
Evidence of the capital coefficient is still much too incom 
plete to clarify all the details. It is safe to state, however, 
that capital per man and scale of output increase jointly 
in the course of technical progress, and the interrelation 
of the three elements is of great importance. 
8) Cf. C. Palm, The Distribution of Repairmen in Servicing 
Automatic Machines (in Swedish) Industritidningen Norden 
Vol. 75 (1947). 
W. Feller, Probability Theory and its Application. Vol. I. 
D.R. Cox and W.L. Smith: Queues. London 1961, Chapter IV: 
Machine Interference.

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