Final answer:
Longer production runs may lower production costs due to economies of scale but increase inventory costs due to larger quantities of output requiring storage.
Step-by-step explanation:
Logisticians are concerned that while longer production runs may drive production costs down, they will increase inventory costs. This is an example of economies of scale. In production, economies of scale occur when as the quantity of output goes up,
the cost per unit goes down, which means that larger factories can produce at a lower average cost than smaller ones. However, the trade-off is that with larger production runs, a firm may end up with higher inventory levels, which can increase storage and holding costs.
Using the example of tree cutting for lumber with a two-person crosscut saw, we can explore production in the short run. In a high-wage economy, companies like Coca-Cola or McDonald's may use more automated technologies to conserve labor costs, while in lower-wage countries, they might focus on labor-intensive production techniques.