For example: The total cost is $10 per unit on average; and if the number of units increases by 1, then the total cost would also increase by $10. Sometimes the result of actual total cost may either increase or decrease, which could be more than $10 or less than $10. In this type of situations, a statistical relation exists between the average total cost and the result.
Delphi Method
The Delphi method is one of the demand forecasting procedure that uses the experts’ opinion to estimate the future demand for any given product. Delphi method is an expert opinion method. …show more content…
As there is an increase in production, there will also be an increase in efficiency of production. There are two different types of economies of scale, which are discussed below:
• Internal Economies – Internal economies are the economies that arise from the growth of the firm itself. Nick, W (2005). Hence, the internal economies of scale is achieved by the company by reducing the cost and increasing the production. There are different types of internal economies of scale such as bulk buying, technical, financial, marketing, and managerial economies.
• External Economies – External economies are the economies that arise from the growth of the industry. External economies occurs only in the industry, which is outside the firm. Nick, W (2005)
Internal economies of scale is usually more important when compared to the external economies of scale in aspects of cost per unit and management