Certified Supply Chain Professional (CSCP) Practice Exam

What is a disadvantage of high product variety in manufacturing?

1. Increases efficiency

2. Decreases manufacturing costs

3. High manufacturing costs

4. Decreases shipping times

The correct answer is: High manufacturing costs

A notable disadvantage of high product variety in manufacturing is the tendency for high manufacturing costs. When a company opts to produce a wide range of products, it often must invest in additional resources which can include diverse machinery, specialized labor, and varied materials. This variability increases setup times and complicates production processes, leading to inefficiencies. Furthermore, maintaining an inventory of different products often results in larger inventories and potentially higher holding costs. Additionally, managing a diversified product line may require more extensive supply chain coordination, which can also add to costs in terms of logistics and warehousing. The complexity associated with high product variety creates challenges that typically cannot be offset by gains in efficiency or reductions in shipping times, often resulting in a net increase in overall manufacturing costs. This highlights why high product variety, while beneficial in meeting diverse customer needs, can significantly impact the cost structure of a manufacturing operation.