Reduction in Variety of Products

Reduction in Variety of Products

It is a general knowledge that larger is the range of products more is the cost included. A large range of products means much more investment in terms of equipment in both fixed and working capital and larger sales attempts that all push up the cost of production and sales. The reduction in range of products will lead to cost reduction because of the following causes:

(i) Reduction in range of production will direct to standardisation of products. The word standardisation stands for that the product should be a standard one that is made of standard materials and components that comprise a standard design and a standard cost. The standard in each one of the above cases has to be determined through management.

The standardisation of products will have the following benefits:

(a) It will decrease investment in inventories because only few standard products will have to be reserved in stock.

(b) The products can be manufactured in greater quantities in each process like a result of enhance in the size of each batch.

(c) The products will be of enhanced quality, better reliability and of less cost.

(ii) Reduction in range of products will direct to generalization of the production process. A generalization of production process includes less of machine setting time, longer runs, increased productivity and lower cost of inspection. As a matter of fact, Standardisation will automatically direct to generalization of the production process.

(iii) It has previously say above that standardisation includes giving a standard product to the consumer. The meaning of this is that quality of the product will not be permitted to get deteriorated but rather it will always be retained and, if possible, enhanced. This will need inspection of the product at dissimilar stages of production so that defects might be remedied at the earliest stage. It will carry economy in reducing the cost in terms of reduction in the number of defective units.

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