Failure to account for the increased transportation costs that would result from building fewer and more centrally located production facilities could result in firm managers selecting a scale of operation that is larger than the optimum.

Question

Quizplus · Accepted Answer

Neglecting the rise in transportation costs from centralizing production can lead to an overestimation of economies of scale, causing managers to choose a scale of operation that is larger than what would be optimal when considering all costs.

Failure to Account for the Increased Transportation Costs That Would