HELPING PRODUCERS ELIMINATE WASTE 207 
don’t want you to make this quantity any larger than you 
reasonably believe will be profitable, for that would not work 
out to our advantage any more than it would to yours. We 
shall carry a reserve stock, so that for two weeks after you 
receive your goods we can ship on receipt of your reorder 
anything that you have sold out. This will permit you 
to make your profits on novelties in money instead of in 
stale goods. 
“You know that no manufacturer of stylenovelties has ever 
before been able to do this because he has found no way of 
making it profitable. But we expect to get orders like yours 
from one retailer in every town. Consequently, we shall 
have a total volume on these goods large enough to let us 
produce them in greater quantities than any manufacturer 
has ever done before. This gives us a much lower production 
and selling cost. You will, in turn, be able to sell greater 
quantities of them because your lower prices will bring them 
within reach of a much larger number of your customers.” 
This novelty plan is cited simply as an example of the 
kind of thinking that a manufacturer may profitably find 
himself doing when he understands how the Model Stock 
Plan can fit into his own and his customers’ businesses. 
An understanding of the Model Stock Plan will also show 
a manufacturer that at the very most he can safely sell to 
one retailer or a chain not more than 50 per cent of his output. 
As we have seen in our early examination of the plan, an 
important part of the improvements possible in distribution 
arises from the compulsion of competition. If the producer 
knows that his whole output will be taken by one customer, 
the fear of being beaten by competitors is removed or at 
least weakened to the point where he no longer is spurred 
to doing his very best and then excelling it. It is equally 
expensive to the retailer who buys too large a proportion of 
a producer’s output, for the retailer is no longer getting in 
his goods the benefit of initiative equal to the producer’s 
when he first established this firm connection. By the 
same line of reasoning, a retailer should not manufacture 
roods for sale in his own store. If he tries it the head of his