Economic Engineering of Milk Processing Costs

¹ Department of Agricultural and Resource Economics, University of Maine, Orono 04469

An economic engineering methodology is used to estimate milk processing costs for a state of the art model facility. The computerized model generates per unit processing costs and allows for various sensitivity analyses.

The study reveals that, for a plant with a full product line, container costs for in-plant blow-molded containers are considerably lower than that of purchased containers. Also, processing costs for products of similar size reflect in-plant economies of size. Costs are also presented for a white milk only plant, and they reveal that per unit costs can be reduced by distributing overhead costs over a wider line of products.

Key Words: economic engineering • milk processing • costs

Submitted on July 1, 1991
Accepted on November 25, 1991