As I was reading The 4-Hour Work Week by Timothy Ferriss, I came across a part in the book that talked about commercial printing and thought I would comment on a scenario he wrote about involving the time- and cost-effectiveness of batching orders. Here is what he wrote:
If you have never used a commercial printer before, the pricing and lead times could surprise you.
Let’s assume it costs $310 and takes one week to print 20 customized T-shirts with 4-color logos. How much and how long does it take to print 3 of the same T-shirt?
$310 and one week.
How is that possible? Simple –the setup charges don’t change. It costs the printer the same amount in materials for the plate preparation ($150) and the same in labor to man the press itself ($100). the setup is the real time-consumer, and thus the job, despite its small size, needs to be scheduled just like the other, resulting in the same one-week delivery date. The lower economy of scale picks up the rest: The cost for 3 shirts is $20 x 3 shirts instead of $3 per shirt x 20 shirts.
The cost- and time-effective solution, therefore, is to wait until you have a large order, an approach called “batching”.
As these prices do not reflect actual prices, the concept is the same. But how do you know if you should order shirts that you will need later on? Here are a few examples of how you should decide to order the extra shirts now or later.
Example 1:
Like Tim’s example, if you need 20 shirts right now and forecast you will need 3 more at a later date, it is better to order 23 shirts now to save on extra setup (“plate preparation”) fees. It is more cost efficient to order the 3 extra items at the same time as the order you are placing now since 3 shirts are a small quantity. If you ordered 3 in the future, you would have to pay the static setup charge for only 3 shirts, which is not the most cost-effective solution.
Example 2:
However, if you want to print 25 shirts now and forecast that you will be needing 25 later, it would probably be best to keep the orders separate. This is because you will only be saving a few extra dollars to print 50 now instead of 25. So, the most cost-effective solution in this case is to print 25 shirts now and 25 shirts later.
When placing an order on any item that needs to be printed, the time- and cost-effectiveness depends weighing the setup charges vs. the number of items you will be purchasing (along with the price of the item). Basically, you need to ask yourself: how comfortable am I paying for a setup charge of $20, $50, $100, $150, etc. for x amount of t-shirts (or product)? You also need to ask yourself: is this best cost-effective choice?
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