A loss is not the whole decision
In a simplified short-run example, producing brings in £800 but incurs £1,000 of avoidable costs and £500 of unavoidable fixed costs. The loss is £700. Stopping eliminates the avoidable costs but leaves the £500 commitment, reducing the loss by £200.
Focus on what actually changes
Compare the cash and costs that differ between choices. A cost that remains under either choice should not be treated as a saving from stopping. In real decisions, closure and restart costs, contracts and customer relationships can matter too.
Short run is not forever
A temporary shutdown differs from permanent exit, when more costs may become avoidable. The example illustrates a decision rule under stated assumptions, not advice to close a particular business.
Explore the shutdown condition or consider changing the input mix.
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