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Sort of, it would come down to suppliers would historically only sell in large quantities to maximize their production efficiency, so the per unit production co
by sct202 5y ago
Sort of, it would come down to suppliers would historically only sell in large quantities to maximize their production efficiency, so the per unit production cost would be minimized by running a long production run. But this would potentially cause scrap if the final product did not sell well to expectations or if there was a design error, and then also increased working capital as the inventory levels would spike really high with infrequent supply from the vendor instead of being more constant with more frequent replenishment.
And then multiply across everyone in a supply chain for a single product having to deal with waiting to receive giant parts orders from their vendors before they could start their own giant order to supply their customers.