Question at position 45 In the context of Total Cost of Manufacturing (TCM), in general terms, procurement, manufacturing, and transportation per unit costs each go down as volume goes up.TrueFalse

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BlackTom AI · Accepted Answer

Consider the idea of costs per unit falling as volume increases. 
Option 1 (True): The general principle here aligns with economies of scale. When you buy in larger quantities for procurement, suppliers often offer volume discounts, lowering per-unit material or component costs. For manufacturing, fixed overheads and setup costs are spread over more units, typically reducing the unit cost as production volume rises. Transportation per unit often decreases because bulk shipping lowers the cost per kilogram or per pallet, and scheduling efficiency improves with larger, steadier volumes. Taken together, these factors commonly drive per-unit costs down with higher volume, making the statement true in a broad sense. 
Option 2 (False): If we scrutinize exceptions, some scenarios break the trend. Very large volumes can trigger diminishing returns in handling, storage, or capacity constraints, potentially increasing costs per unit in certain contexts. Additionally, peak pricing, congestion, or the need for specialized equipment for oversized shipments might negate per-unit savings at very high volumes. In procurement, supplier pricing might plateau or even rise due to scarcity or need for more expensive lead times. Therefore, while the general trend is downward, it is not guaranteed in every situation, which is why some might argue against a blanket True. 
In summary, the statement captures the dominant expectation of economies of scale across procurement, manufacturing, and transportation, but it is prudent to acknowledge that specific circumstances can produce deviations from the downward per-unit cost trend.

Question at position 45 In the context of Total Cost of Manufacturing (TCM), in general terms, procurement, manufacturing, and transportation per unit costs each go down as volume goes up.TrueFalse

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