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Determination of satisfactory scale for data processing facilities

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  • Susan L. Solomon

Abstract

The economic theory of optimal scale may be applied to service organizations with stochastic volumes, such as the data processing installation of a firm, as well as to production facilities with deterministic volumes. The objective of such analysis is to ascertain which systems are most flexible in processing wide ranges of volumes efficiently and to postulate a general shape for the cost function of similar facilities, if possible. The more flexible the data processing system, the better it is able to cope with fluctuations in transaction volume over time and the less the need for extensive pre‐installation systems study. A simulation model of the job environment of three common EDP systems provides information on the shape of their cost functions in the neighborhood of optimality.

Suggested Citation

  • Susan L. Solomon, 1974. "Determination of satisfactory scale for data processing facilities," Journal of the American Society for Information Science, Association for Information Science & Technology, vol. 25(3), pages 151-155, May.
    • Handle: RePEc:bla:jamest:v:25:y:1974:i:3:p:151-155
    DOI: 10.1002/asi.4630250305
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