Book Value of Material on Hand for a Large Eastern Railroad

The logarithmic scale is particularly valuable for an operating chart such as this when there is a great difference in the size of the figures which must be compared. The lower curve here averages about $60,000 while the upper curve averages about $1,100,000. The logarithmic scale permits accurate comparison of various curves to determine whether any curves are out of harmony with the other curves

Fig. 124 gives an especially interesting use of curves on the logarithmic ruling. Executives who have puzzled over methods for controlling the quantity of materials or supplies on hand realize full well that it is sometimes just as im.portant to watch the curves for materials having only a relatively small consumption as it is to watch the curves for those materials of which the greatest quantity is used. The mere fact that great amounts of capital are tied up in stocks of certain largely used materials tends in itself to cause very careful scrutiny of those accounts, while numerous small or inactive accounts may be entirely overlooked or neglected. A little study often shows that there is no necessity for carrying so much material on hand.

COMPARISON OF CURVES

If charts similar to Fig. 124 are used, the executive can tell instantly whether the stocks in different departments or of different kinds of material are increasing or decreasing simultaneously and proportionately.

"To summarize -- with the ordinary arithmetical scale, fluctuations in large factors are very noticeable, while relatively greater fluctuations in smaller factors are barely apparent. The logarithmic scale permits the graphic representation of changes in every quantity without respect to the magnitude of the quantity itself. At the same time, the logarithmic scale shows the actual value by reference to the numbers in the vertical scale.