A footwear company specializing in the production of ballet shoes normally produces shoes only in women's and girl's sizes. The company is hired by several customers to produce shoes in men's and boy's sizes. Which of the following should the manufacturer consider in order to achieve economies of scale in shoe production?
A) The amount of shoe production cost compared to the typical costs incurred in shipping
B) The level of effort required to retool the company's manufacturing plant to produce only men's shoes
C) The cost of producing one size shoe at a time in large quantities and storing them for future sales
D) The amount of shoe storage cost compared to the typical costs incurred in shipping
E) The cost associated with efforts to increase customers that might also place orders for men's shoes

Question

Quizplus · Accepted Answer

The manufacturer should consider the cost of producing one size shoe at a time in large quantities and storing them for future sales in order to achieve economies of scale. This is because producing shoes in bulk quantities can help to reduce production costs and increase the efficiencies of production processes. Additionally, storing the shoes for future sales can help to ensure that the manufacturer is able to fulfill orders quickly and efficiently, thereby reducing lead times and improving customer satisfaction. Factors such as shipping costs, plant retooling efforts, shoe storage costs, and customer acquisition costs are also important considerations, but they are secondary to the need to achieve economies of scale in shoe production.

A Footwear Company Specializing in the Production of Ballet Shoes