How does a company know when to stop producing in a particular plant?

Answer by  tavidoru (25)

The amount of demand and the amount of produce is the key in any company.You need to find a balance between this two .Then you don't have to worry about to stop producing.Better try to find better partners that can support your interests and keep on producing the "particular" plant.

Answer by  mlucas (515)

Is the company profitable at that plant? If so, then Can the product be made cheaper at another location usually outside the United States?

Answer by  Richard88 (391)

Overall per unit cost of producing a good the plant is a primary factor. The marginal revenue produced by selling the plant's output minus the marginal cost of producing and selling the plant's output must be positive for the plant to be economically worthwhile to operate.

Answer by  jtpaag (473)

Plant production is based on sales demand and lead time. Lead time is the time it takes to produce a finished product. As long as there is more demand than product on hand, production continues. When production exceeds demand, excess inventory accumulates and production should be scaled back or stopped.

Answer by  Bsjinx (97)

While the overall decision is not a simple one, a company should stop producing at a particular plant if it is no longer reasonably possible in the foreseeable future to make a profit from that production, once all of the associated expenses are taken into account.

Answer by  Liz59 (10966)

Well, a company can predict how much production is needed. It is called supply chain management. If you study this, you will realize how production is affected in different parts of the process. It will allow you to predict and forecast the amount of production which is accurately needed for optimal processing

Answer by  Pilitev (7)

When the revenue of a single product is less then the variable costs of a single product the plant should close down. Otherwise they're gonna lose money on each extra product they manufacture. Constant costs are left out of this decision because the're sunk costs which are already made in the past.

Answer by  rnovikoffgmailcom (1722)

A company will be able to decide this through looking over records which shows the production and the profit and see if the work is actually worth whats coming out of the business.