The Company is also making significant changes in manufacturing which will continue to increase margins through efficiency improvements, range changes and capital investment. Production activity is being better planned which enables more even utilisation of the factory at Thorntons over more of the year.

This smoothing of the Christmas peak means we are carrying more stock [inventory] for longer periods but the reduction in unit cost of products more than outweighs the additional interest cost.

Discussion points
1 How does the company reduce the unit cost of products by smoothing out the production?
2 What are the other costs of holding stocks, apart from the interest cost mentioned in the extract?