Unit 2 → Subtopic 2.2
Remodeling a Factory to Optimize Supply
Supply in economics is determined by how efficiently businesses produce and deliver goods. A factory’s ability to optimize its operations affects both the quantity of goods supplied and the costs of production, influencing market equilibrium. This project challenges students to apply economic principles by redesigning a factory’s production process to improve efficiency, reduce costs, and maximize supply.
Students will take on the role of production managers tasked with remodeling a factory to optimize its supply chain. They will research factors that influence supply, including production costs, availability of raw materials, labor productivity, and technology. Using this knowledge, they will develop a plan for improving factory efficiency—this may involve introducing automation, reorganizing workflows, or sourcing cheaper materials. Students must also consider the trade-offs and opportunity costs of their decisions. For instance, while automation may reduce labor costs, it could require a significant upfront investment that takes years to pay off.
As part of their research, students should examine real-world examples of how businesses have improved supply through innovation. Case studies of companies like Tesla, Amazon, or Toyota can provide insight into strategies for reducing inefficiencies and increasing production capacity.
The final component of this project will be an in-class presentation, where students will explain their factory remodel, illustrating how their proposed changes increase supply while minimizing costs. They should use diagrams, supply chain flowcharts, or production cost comparisons to visually represent their ideas. They must also anticipate and address challenges that businesses face when optimizing production, such as supply chain disruptions or high investment costs. The goal is for students to connect economic supply theories to real-world manufacturing and production decisions, demonstrating how businesses respond to changing market conditions.
Recommended Procedure:
Research the Factors Affecting Supply – Identify key determinants of supply, such as production costs, labor efficiency, and technology. Research how companies optimize supply chains to reduce costs.
Develop a Plan for Factory Optimization – Propose changes to a factory’s production process, such as automation, workflow reorganization, or new sourcing strategies. Justify decisions using supply theory.
Analyze the Economic Trade-offs – Consider the costs, benefits, and opportunity costs of the proposed changes. Discuss short-term vs. long-term effects on production and business growth.
Create Visuals to Illustrate the Supply Process – Develop diagrams, charts, or simulations that show how the factory remodel improves supply efficiency and cost reduction.
Present and Defend the Proposal – Deliver an in-class presentation explaining the remodel, how supply will be optimized, and what challenges must be overcome. Respond to peer questions about feasibility.
Suggested Sources:
Understanding Supply and Production Costs:
Investopedia: Factors Affecting Supply – https://www.investopedia.com
Khan Academy: How Businesses Adjust Supply – https://www.khanacademy.org
2. Case Studies on Factory Optimization:
Harvard Business Review: How Companies Improve Manufacturing Efficiency – https://hbr.org
Toyota Production System: Lean Manufacturing Principles – https://www.toyota-global.com
3. Supply Chain and Logistics Management:
World Economic Forum: The Future of Manufacturing and Supply Chains – https://www.weforum.org
McKinsey & Co.: Reducing Costs Through Production Efficiency – https://www.mckinsey.com
4. Presentation and Data Visualization Tools:
Google Slides, PowerPoint, or Prezi for presentation design
Canva or Lucidchart for creating supply chain diagrams
Grading Rubric:
Total Points: __ /20
