Job Lot

Accumulation/Distribution Indicator - A/D Definition and Uses

What is Job Lot

A job package is a futures contract with a trading volume of raw materials below the levels required in regular contracts. These contracts, or lots, exist to add liquidity to futures exchanges by allowing “smaller” participants to enter the market. A work package can also be used to describe custom manufacturing orders that are grouped together to increase efficiency and quality.

BREAKDOWN Work package

The general term “work package” describes any situation in which a small amount of a material or product is produced at one time and sold as a single unit. In finance, any commodity futures contract in which the underlying commodity is denominated in an amount lower than normal is considered a job package. In the manufacturing sector, producing a small batch of custom products is known as a work package.

Lot of jobs in the trade of raw materials

A commodity futures contract is an agreement between a commodity buyer and a commodity producer that describes the delivery of a specific commodity at a future date at an agreed price. A futures contract is considered a work package when the agreement between the buyer and the seller for the delivery of a product is less than the normal limits of a product futures contract.

Precious metals are often bought and sold on commodity futures. For example, a commodity exchange can issue silver futures contracts denominated in 5-ounce tranches. If the exchange agrees to enter into a commodity futures contract with a buyer below the minimum of 5 ounces, it is considered a work package.

Work packages can be of any size and differ depending on the commodity and the specific futures contract. By offering lots of jobs in addition to regular contracts, the exchanges aim to make the market more accessible to investors with low investment capital, thereby strengthening liquidity and the efficiency of trade.

Lot of manufacturing jobs

All manufacturers are trying to standardize their products and their production capacities. Bicycle manufacturers, for example, may have machines that produce only two types of bicycle frames: men and women. This reduces production costs and increases production efficiency. However, there are occasions when a customer or group of customers needs a custom order. These custom commands are called work packages.

To fulfill these orders and maintain efficiency, manufacturers will consolidate all custom orders together. Using the same example above, if the Tour de France riders need a special type of frame, the bike manufacturer can adjust their machines in one go to batch produce the custom order. Then he can bring the machines back to standard operations. It’s better than if the company produced a custom bike a week and had to change its machines back and forth each time.

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