Answer to Question #205345 in Economics of Enterprise for coli

Question

Why should electricity generation plants (Eskom) keep more stock rather than less stock?

Answer 1

Electricity generation plants such as Eskom keep more stock rather than less stock because it's more cost-effective and also helps to meet customer service targets without running out of stock. More electricity is generated than sold because some energy is lost either through direct use or through heat during transmission and distribution and thus, electricity plants generate at a maximum during specific times so as to lower the cost of energy during generation to a minimum. More stock also ensures electricity generation plants (Eskom) meet maximum supply capacity without depleting the generated stock.