Ok, we need to discuss Internal logistic

[Killjaeden]

Sorry you maths does not add up

Because you havent understood it.
If i produce energy cells for my ore mine i dont make profit in those energy cells. If i sell energy cells for high price to somewhere else instead i make profit. And to supply my ore mine i buy energy from somewhere for cheap-> reduction of ressource cost -> profit.

It does not scale forever because NPC stations are limited. But return on investment for "supplementary stations" is much quicker than self sustaining complexs. Selfsustaining complexes are for when you are lazy.

[Alan Phipps]

In other words, every time the player produces a resource or intermediate product needed for their own stations, they have the opportunity to both supply that need AND pocket the difference between what they can reliably sell it for (at a higher price) and what they can also buy it for elsewhere (at lower price) using the NPC trade market. You don't get that chance of making a side profit when you always consume your own produce.

A key need is the reliability of there being both high sell and low buy opportunities with safe access and transfer. You also need to cover the initial cost of the tied transport fleet and of any associated ships that you might lose and replace during the trade for cash-recovery/profit process.

[ZaphodBeeblebrox]

A player Solar Power Plant requires crystals

Solar Power Plant if we sell these as a product then

Costs................Gross.......................Profit
Crystals............Sales of Cells............gross - costs

So if you transport those to your mine they are not free, there is a cost built in to the production.

Silicon Mine

Costs....................... Gross................ Profit
Bought in energy....... Sales of silicon....gross - costs

So buying in energy cheap at whatever cost does not raise profits. Costs always reduce profits.
Your profit margin may be greater with bought in energy or it could better if the price of crystals
is very low.

In order to to be able to sell intermediates you must have over-production.
If you don't then your whole distributed complex is going to grind to a halt.

To have over-production you must have built more infrastructure.
If you are buying in resources to supply this over-production then there are costs
involved in these intermediates. So yes you can make profit off of the intermediates
but they don't come for free either.

[Edit]
Wages are a cost, now they may be low, but we are not going to ignore them either. Using trade ships to transport will result in extra costs.
Replacement if destroyed. At higher levels they get themselves repaired and use jump drives, both extra costs. Cost always reduce profits. Did I say that already?

[TheDeliveryMan]

Closed loop complexes without additional trading have a terrible return of investment. You need to spend tens of millions for stations and CCKs and won't make a single credit profit for transporting resources.

On the other hand, you could outsource bio, food, crystal and energy production to the Yaki by taking build missions and setting up logistics to supply the factories. For example, such an energy loop (Nostrop Oil based, size 2x L = 5x M) will give you a profit of 1 million credits per hour on top of all excess energy cells.

[ZaphodBeeblebrox]

TheDeliveryMan said

Closed loop complexes without additional trading have a terrible return of investment.

Errm.. No they don't. Yes my initial investment is higher. So in the short term your distributed complex may be more profitable.

However at some point I will have paid off the initial investment and recouped all of my costs. After this point I have no costs. Every item sold is pure profit.

You on the other hand are buying in from several sources. That involves a cost for each resource. You will always have these costs and they affect the profit you make, forever. So in the medium to long term the closed loop is always more profitable.

Now I built complexes to supply energy, food, and secondary resources as products. So I supplied to every level of the economy. Wherever I built the local markets tended to become saturated with my produce.

[Alan Phipps]

Sorry, I'm in slight disagreement here as I don't see the relevance of the hidden production costs you mention. Here's a hypotherical example:

Case 1: Your integrated SPP/production complex produces 10,000 E-cells in some time unit that the rest of your complex needs as a resource for further production. Since all are complexed together, then the transfer takes place with the need met and no *apparent* loss or profit for this transfer.

Case 2: Your separate SPP complex produces 10,000 E-cells in some time unit that another of your complexes would likely need as a resource for further production - although it holds a buffer stock as a reserve. An extant transport fleet local to your SPPs safely and reliably sells those 10,000 E-Cells to nearby NPCs at 18Cr each. Meanwhile, close to your other complex, another local transport fleet safely and reliably buys from NPCs and transports 10,000 E-cells for your complex at 14 Cr each. When this has all been done, the need has been met exactly as in Case 1 but you also have 40,000 Cr profit in your account for that time period.

Caveat: Case 2 needs the fleets to be maintained and the sinks and sources to be reliable, true. The production costs are the same in both cases with pretty much the same complex and station requirements, but not all are fully integrated into one big complex as this enables the distribution across suitable NPC supply and demand localities.

Comment 1: The day that Case 2 ceases to reliably work profitably for you, you build the SPP elements into your second production complex and so make it into a Case 1 scenario, but you are hopefully still selling the produce of the first SPP complex regardless and so never really risked much by going closed-loop later rather than sooner.

Comment 2: I haven't mentioned resources for the SPP complex in Case 2. This is because crystals could either be directly transferred by ship from your production complex thus approximating an extended Case 1 supply scenario or, if suitable, similar sell and buy situations could be set up to make even more profit - unfortunately the NPC supply of cheap crystals is not normally that reliable.

[Seanchaidh]

The main advantage of closed loops (or less complete forms of vertical integration) is that you get the value added from producing the intermediate goods that you use without having to find a buyer (that value becomes embodied in the final product, which you can then sell or use as you like). The main advantage of separate complexes is that you can leave out the less efficient (with respect to initial cost vs. value added) facilities or fill a niche in an already existing economy that has in abundance the inputs but desperately needs the output.

[ZaphodBeeblebrox]

@Alan

A thought experiment.
First off a couple of definitions for the terms as I understand them.

Internal Logistics is the movement of resources /products between player owned stations.
External Logistics is the buying and selling of resources or products that involve NPCs.

profit margin (noun) the amount by which revenue from sales exceeds costs in a business.

Now to start with, I want to focus entirely on Internal Logistics. It is in the title of the OP.

Let us imagine that you have a distributed complex that contains the exact same set of stations
that my closed loop complex has. That further more, like the closed loop, each level in your complex only produces the
amounts required for the next stage in the production process. Also all of the stations are in the same sector and
fairly close together.

Now, you are delivering the various resources between stations using trade ships and I use connectors. Let's also assume that
all of your deliveries are done in a timely manner so there is no stuttering / lags in production.

So we now have two functionally identical complexes. You tranfer resources with ships, me with pipes.
At some point having sold the product/s from this complex each will reach the point where they have paid off the original
investment.

At this point every succeeding product that the closed loop produces has no cost.
However the distributed complex that uses ships and the CLS software has a small but recurring cost.
This cost is the wages paid to the pilots of the ships. It may be small but it is a cost and it affects
your profit margin.

[Alan Phipps]

I probably agree with you for that in-sector scenario. Using your definitions I would have to be using both internal and external logistics for the same complexes and not be tied to using one sector.

The finesse bit of the distributed approach is in siting your stage complexes across different trading sectors to take full advantage of the local NPC supply and demand markets. That way you can optimise the trade profits accrued from local NPC market transactions until they far outweigh the routine fleet maintenance costs.

I think we are probably in agreement that the decision will form a judgment call in trading-off profit, risk, complexity and planning/management against bombproof dependability and convenience. As such, different approaches may suit different players and playstyles and may be pretty location/circumstance-specific in nature.