Question

What is a tradeoff of consolidating orders to save costs?

a) faster inventory turns
b) reduced forecast error
c) longer order cycle lead times
d) better inventory positioning
e) none of the above

Answer 1

Consolidating orders to save on costs usually results in c) longer order cycle lead times, as businesses wait to accumulate enough orders for economies of scale, delaying delivery to the customer.

Step-by-step explanation:

The tradeoff of consolidating orders to save costs is often longer order cycle lead times. When businesses consolidate orders, they typically wait until they can send a larger shipment, which means products stay in the warehouse longer while the company waits to accumulate enough orders to achieve economies of scale in shipping. This leads to a delay in the time it takes for an order to be processed and delivered to the customer. While this strategy can reduce shipping and handling costs, it does come at the expense of speed of delivery.