What causes opportunity cost?

Imagine an ecommerce venture that, until recently, handled all its deliveries directly to customers. This approach may have suited its operational scale and demand profile adequately during its initial growth phase.

However, as the business expanded, its sales volume skyrocketed. This surge in demand led to a proportional increase in the number of shipments required to be processed and dispatched.

The direct consequence of this growth was that the time dedicated to managing shipping activities became increasingly burdensome. The previously manageable workload transformed into a logistical nightmare, threatening to hinder the company's efficiency and customer satisfaction.

The concept of opportunity cost emerges when a business entity decides to opt for one particular course of action, thereby forsaking the potential benefits associated with alternative options.

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