Impact of Lean Production Techniques on Dell Computer Company

How did Dell Computer Company adopting lean production techniques affect their supply curve for PCs?

1. Increased production efficiency

2. Decreased production costs

3. Attracted more players into the market

Answer:

Adopting lean production processes reduced Dell's production costs, causing a rightward shift in their supply curve. This represents an increase in supply.

When Dell Computer Company adopted the lean production process in the 1990s, it effectively reduced inefficiencies without sacrificing production volume. This lean production process is synonymous with technological improvement that leads to cost reduction. As a result of reduced production costs, Dell's supply curve for PCs would have shifted to the right, representing an increase in supply.

During the course of the technological advancement period, large scale producers like Dell leverage alterations in technology to enhance efficiency and productivity, and thereby gained an advantage over smaller manufacturers. This reflects positively on the long-run average cost curve, with the downward-sloping economies of scale portion of the curve stretching over a larger quantity of output.

Technological improvement, such as lean manufacturing, would result in increased supply curves for individual firms and on a market level. In this scenario, the increased profits drawn from cost reduction might attract more players into the market. Of course, this market entry process would stop when supply increases adequately, driving profits back to normal.