ECONOMIES OF SCALE

[sunandaC]

A firm can realize economies of scale in manufacturing, purchasing and transportation by holding inventories.

If purchasing buys large amounts, the firms get quantity discounts.

In turn, transportation can move larger volumes and get economies of scale through better equipment utilization.

Manufacturing can have longer production runs if more material is inventoried, allowing per unit fixed cost reduction.

 

[jitendra05]

A firm can realize economies of scale in manufacturing, purchasing and transportation by holding inventories.

If purchasing buys large amounts, the firms get quantity discounts.

In turn, transportation can move larger volumes and get economies of scale through better equipment utilization.

Manufacturing can have longer production runs if more material is inventoried, allowing per unit fixed cost reduction.

Hey sunanda, as we know that economics of scale may be achieved when there is a production on a large scale with the minimum input cost. BTW, i am uploading a document which will explain this concept in more detail.