If i produce bottled water i buy water bottles and fill them with water. Why do i not buy plastic and make my own bottles? Why does it not actually save on costs from paying another company and taxes from buying/selling, and also possibly transportation?
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Because of the economies of scale and initial investment required for machinery. You make your own bottles – you need the raw materials, storage for your own materials, the moulds to make your bottles, the storage to store your bottles that are being made at a faster rate than you can fill them.
Large companies make use of just in time delivery so their bottles arrive daily/weekly as they need them. The same lorry will also pick up the full bottles and deliver them in to the wholesalers so there is also another reduction is costs there.
Some large companies will ‘make’ their own bottles using pre manufactured ingots of plastic that are then heated and blown in to shape at the bottling plant – this is beneficial because they can have several shaped bottles depending on the product being bottled at the time, but this will only require one basic ingot –
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