Darren you are correct that SS could possibly crank out more 1/4 pieces, but given the fact that the 1/4 or PFs are generally larger pieces, include fabric, etc... I would assume the costs are higher than producing 1/5 pieces. So it becomes a riskier venture for a manufacturer to produce and carry this inventory.
One way a manufacturer can minimize the risk of carrying higher cost inventory, is to carry less inventory. Of course carrying less inventory may result in missed sales if demand outstrips supply. The manufacturer can have their cake and it is too so to speak, by carrying less inventory while charging a higher price for their product. This strategy allows them to minimize the amount of working capital tied up in inventory while simultaneously maximize profits.
Remember, if SS pulls out of the 1/5 scale market they are leaving dollars on the table. SS will want to recoup those dollars as quickly as possible with the least amount of risk. One of the primary risk in manufacturing is tying up your working capital in slow moving inventory. Given the number of cancellations we are seeing reported by fellow forum members, and given the number of products released months ago that are still available, I would not be surprised if currently SS is sitting on more inventory than they would like.
Again, this is one potential outcome for SS if they elected to drop the 1/5 scale lines. I'm basing this off of my own personal experience of providing financing and approving financing requests for manufacturers over the past 16+ years. This is pure speculation on my part, I am not claiming that I kow with 100% certainty how SS would handle dropping 1/5 scale product lines. I was simply thinking out loud. There are a number of ways SS could handle and a switch to being primarily a 1/4 scale producer.
