Question

Generally, what is the primary advantage of ordering goods in large quantities at once?

Option 1: Better customer relationships
Option 2: Less inventory management
Option 3: Cheaper per unit price
Option 4: Quicker delivery

Answer 1

The primary advantage of bulk ordering is a cheaper per unit price due to economies of scale, where increased output leads to lower unit costs, benefiting both consumers and businesses.

Step-by-step explanation:

The primary advantage of ordering goods in large quantities at once is generally a cheaper per unit price. This effect is known as economies of scale, where the cost per unit decreases as the quantity of output increases. Companies like Costco and Walmart utilize this by providing products in bulk, allowing them to offer lower prices to consumers. Similarly, Amazon saves costs by operating out of large warehouses with low rents and using highly computerized systems, passing on the savings to consumers through lower prices. Ultimately, economies of scale can lead to better and less expensive products, increasing profits for businesses and raising income for their employees.