ABSTRACT
The problem is how to satisfy given demand requirements at the least total cost when there are avoidable (start-up) costs. This problem is easier when each company makes only one commodity so that the company and the commodity avoidable costs coincide. It is also easier even for the case in which there is one commodity with several characteristics and firms have limited capacity to produce them. For instance, a ship’s cargo has among its salient characteristics volume and weight both of which are bound by the nature of the ship’s design (Telser, 1987, chapter 5). The problems herein are harder because two kinds of avoidable costs are present – company and commodity. A company specific avoidable cost is incurred if and only if the company is active so that it produces at least one commodity. This kind of the total cost need not depend on how many or on which commodities the company can make. A company incurs a commodity specific avoidable cost if and only if it makes a positive quantity of the commodity. These costs may differ among commodities and need not vary with how much of each is produced.
