Every time you touch a product, ingredient, line, carton, container etc. has a cost, the reality is you have to handle smaller SKU's significantly more to move the same amount of product. It's really that simple.
For example, your packaging machine can do 200g blocks or it can do 400g blocks the issue is it can't do 200g blocks any faster than 400g blocks so it literally takes twice as much time (cost) to package 20kg in 200g blocks than it does 400g blocks. That then also imapcts the packing of those 200g blocks or 400g blocks into cartons, it takes twice as long to put double the number of smaller packages in the box as it does half the number of larger packages.
Then every time you then switch your line from producing 400g blocks to 200g blocks inccurs down time and has a cost.
I could go on but I'd be here all night.
Every place I have worked at, smaller sku's are processed faster. Also with lower rejects as they less complicated products easier to manufacturer,.
Ultimately you probably can push out more product faster, but when we get to that point we talking about the same thing, which is basically executives have realised it more profitable to push a min base line, you an achieve by making pricing unattractive for smaller sku's or refusing to supply the smaller sku at all.
So lets go back to your example.
Maybe if you only 400g blocks, you can push out 50kg per minute. If you doing 240g blocks it might be something like 30-40kg per minute. However the problem is, you might struggle to sell the the 400g blocks if most people are satisfied with 240g, and you might struggle to sell 240g if most people are satisfied with 100g. So you can only get to that efficiency by manipulating the market, either by making the smaller sku unavailable or making it priced unattractively. There is no way a 240g sku cost the same to produce as a 400g sku.
In every factory I have worked at, its usually been the supermarkets pushing for larger sku's against the factory's wishes as well. As a manufacturer packaging was a huge part of the expense, so obviously we preferred smaller sku's. Reliability, voids, rejects, downtime, whatever you want to call it basically went to crap on the largest sku's and a lot of the machinery couldnt even produce the larger sku's so that required capital expenditure as well.
As an example, could run 10 pack multipack at 60 sku's per minute, or 24 pack multipack at only 35 sku's per minute. The reject rate on 10 pack multipack would be comfortably under 0.1%, whilst for 24 pack it could be in excess of 10%. Rejects are extremely expensive, either thrown away or having to be cycled again, regardless of recycling the packaging expense is always lost.
Before automation larger sku's typically required twice the staffing levels, even after automation, smaller sku's would be fully automated, larger sku's partially automated.
Finally not just more rejects on larger sku's, but the amount of lost product is higher, as a bigger sku means a bigger grams in the reject. It follows a similar principles to cpu manufacturing where basically larger dies are a pain in the backside.
If the factory had its own way, it would have only produced singular products, no multi pack at all, and at the biggest just 6 packs or 5 packs.
The advantage of the larger sku's if you make all the smaller sku's unavailable or unattractive to buy, is you forcing the consumer to buy more than they want/need. You manipulating consumers to buy a larger quantitity of your product.
So I think back to this particular factory, less than 5% of sales were the largest sku's, so clearly consumers didnt like it either, but if we suddenly largest sku only, the sales would obviously increase, suddenly the capital expenditure has a better business case, and maybe at the end of it all, more product is pushed, and more money is made, which is what I think has happened.
