In microeconomics, economies of scale are the cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.
Often operational efficiency is also greater with increasing scale, leading to lower variable cost as well.
Economies of scale apply to a variety of organizational and business situations and at various levels, such as a business or manufacturing unit, plant or an entire enterprise. For example, a large manufacturing facility would be expected to have a lower cost per unit of output than a smaller facility, all other factors being equal, while a company with many facilities should have a cost advantage over a competitor with fewer.
Some economies of scale, such as capital cost of manufacturing facilities and friction loss of transportation and industrial equipment, have a physical or engineering basis.
The economic concept dates back to Adam Smith and the idea of obtaining larger production returns through the use of division of labor.Diseconomies of scale are the opposite.
This was attributed to improved economies of scale and higher proportion of sales of Medtecs-branded products and personal protective equipment (PPEs), the medical equipment supplier said in a regulatory filing on Monday (March 1) ... She is also the sister of WilliamYang, who is deputy chairman, executive director and chief executive of the company.
This is important to enable transport operations to reach their desired economies of scale coming out of emerging shared common situational awareness for supply chain efficiency and visibility among actors within the self-organising ecosystem of maritime transport.