Postponement may reduce overall profits for a firm if a single product contributes the majority of the demand because
A)the increased manufacturing expense due to postponement outweighs the small benefit the aggregation provides in this case for the dominant product.
B)the decreased manufacturing expense due to aggregation outweighs the small benefit the postponement provides in this case for the dominant product.
C)the decreased manufacturing expense due to postponement outweighs the small benefit the aggregation provides in this case for the dominant product.
D)the increased manufacturing expense due to aggregation outweighs the small benefit the postponement provides in this case for the dominant product.

Question

Quizplus · Accepted Answer

If a single product contributes the majority of the demand, then the benefit of cost reduction due to postponement may be outweighed by the increased manufacturing expense associated with the process. Thus, the decreased manufacturing expense due to aggregation may be more profitable compared to postponement in this case.

Postponement May Reduce Overall Profits for a Firm If a Single