Scales Of Production

Ask a workshop to make you one chair and it will cut the parts by hand, and the chair will cost more than a week's wages. Ask for five hundred and the same workshop will spend two days making jigs first, then cut all two thousand legs in an afternoon, and each chair will cost a fifth as much. Ask for five hundred thousand and nobody will cut anything: a mould will be made, at a cost that would buy a small house, and after that each chair will cost less than lunch.

Nothing about the chair changed. What changed is how many, and this lesson is about why that single number decides almost everything else. You will learn how products are produced in different volumes and the reasons why different manufacturing methods suit each: prototype, batch, mass and continuous production. You will learn what fixed and variable cost mean, calculate the unit cost at different quantities, and find the break-even point at which one method overtakes another, which is the calculation the specification's own maths column asks for beside this section. This is specialist technical principles content, examined in Section B of Paper 1.