PRODUCTION COSTS AS STRATEGIC DIFFERENTIATOR: THE CASE OF THE SUGAR-ALCOHOL SECTOR

This paper is based upon an average cost analysis so as to identify which is the optimal level of production in two production plants of the sugar and alcohol sector, considering potential economies of scale. The authors have opted to study the Brazilian sugar and alcohol sector and, using the data set they obtained, have chosen a study on two sugar cane plants located in the city of Novo Horizonte, state of Sao Paulo. Plants located in the same region were favored so as not to present great variance in the plants' features, with a focus on the production unit of both. While Usina Sao Jose da Estiva currently operates a single production unit, Usina Santa Isabel operates two. Conclusions were also supported by direct interviews with professionals related to the plants.