Inducements to Improvements the Consequences of Improvements the Securing of Improvements Problems in the Application of Linear Programming

The Fluid Catalytic Cracking (FCC) process was introduced commercially in 1942; in the half-century of its existence, it has been improved again and again, so that plants today operate on a much larger scale and at a fraction of their original unit costs. This paper provides a methodology for a study of the history of improvements to the FCC process, to understand both their engineering and economic natures.' Improvements in an industrial process can take many forms new pieces of equipment, greater knowledge of scientific and engineering principles, more efficient organization and administration of resources, and so on. To relate these forms to each other is a difficult undertaking, yet necessary if the overall sequence is to be understood. In this paper the problem of relating different improvements i n their sequence is discussed; and a common mode of representation is suggested, involving the application of linear programming. It is argued that the shadow prices of the constraints in the dual programme give indications of the incentives for improvements, and that the changes in the coefficients of the technical matrix give indications of their consequences. For an understanding of the creation of the improvements themselves, however, one must still rely upon a history of the industry's research and development activities. Two problems in applying h e a r programming to the analysis of a changing economic system are discussed. The first arises i n expressing the non-linear technical and economic relationships in linear form; the second in representing as a single system what is, because of the effects of the improvements, an evolving one. These problems, and the ways in which they will be addressed, are illustrated at the end of the paper. Finally, a method of planning companies' Research and Development activities frequently applied in the industry is reported, and its informational requirements identified. The extent to which the data generated in the course of this study of improvements will be useful in such exercises is then indicated. ' Other parts of the study will be published in subsquent papers and the final work will appear as a book.