Unit cost falls with volume until coordination cost rises faster than the savings.
The curve turns where the cost of coordinating the organisation exceeds the savings from volume. It is the economic statement of Brooks's law and of span-of-control limits.
In practice
- A support organisation of forty people answers tickets faster than the same function at four hundred, where a ticket now passes three queues.
- A restaurant kitchen that works beautifully at sixty covers is chaotic at two hundred with four times the staff.
- Further reading
- Wikipedia
- Subject
- Economics & Incentives
- Essay
- The regularities money obeys