The cost of insulation will increase if the insulation material thickness will be higher than required. So the cost of losses will be go high. The thickness should be in such a way that the conserved heat loss should be more than the cost of insulation. So at optimum thickness the saving will be higher than the insulation cost
At a particular point, the total cost, which is the sum of the lost energy and the material cost, reaches a minimum point and it is the optimum thickness required to do insulation. Figure 1 gives idea about the calculate the economic thickness.