Though this method of averaging all orders together without respect to the size of the order is sufficiently accurate for many purposes, there are times when such a method may gravely mislead an executive. It is almost invariably true that small orders cost more per unit of output than orders of large size. A man who makes a selling price for his work on the average cost of small orders and large orders combined may be

FREQUENCY CURVES 191

losing money unnecessarily, because he does not realize the true cost of work when it is done in only small quantities on different orders.

Fig. 159 proves the great variation in the cost of doing the work of handling a certain class of freight. The position of the dots on the chart shows that work done in orders of only twenty -five packages costs over twice the average for orders of four hundred or over. In keeping track of the cost of handling freight of different kinds for a large steamship terminal and warehouse company it was found impossible to get reliable cost figures by averaging, day by day, the labor cost of handling freight for preceding days. On some days all the orders for one commodity might be small orders, and on the next day a very large quantity of that same commodity might be handled all in one large order, so that a gang of men could work steadily all day on that one order. Naturally if a large gang of men work all day on one order, the cost per package handled would be very much less than if several different gangs were used in handling numerous orders of only ten or twenty-five packages each. In order to get a clear view of what was actually happening, considerable study was given to the problem and the method shown in Fig. 159 is the result.