Economies of scale can be exemplified by which scenario?

Economies of scale refer to the cost advantage that arises when an organization increases its level of production. This typically occurs because the fixed costs are spread over a larger number of goods, and bulk purchasing leads to per-unit cost reductions. The scenario where a supplier sends a full truckload shipment after demand has built up perfectly illustrates this concept.

By accumulating demand and opting to send a full truckload, the supplier can maximize the use of transportation capacity, thereby reducing the per-unit shipping cost. This method enables the supplier to achieve lower costs not only in freight charges but also in handling and packaging, leading to overall cost savings that can be passed on to customers, or better profit margins for the supplier.

In contrast, the other scenarios do not represent economies of scale effectively. Frequent partial shipments increase costs due to inefficiencies related to handling and transportation. Offering discounts for small orders might appeal to customers but does not leverage scale, as smaller shipments do not benefit from reduced costs per unit. Using multiple shipping options may enhance flexibility but does not necessarily lead to cost reductions associated with producing or transporting larger volumes. Thus, the scenario of sending a full truckload shipment demonstrates economies of scale clearly and effectively.