Markstrat - for a cost reduction project, why is existing inventory sold off to a trading company ?

Basically when you are reducing the cost of a product you are altering one of the characteristics, the Base Cost. In the Markstrat World, when you change a product's characteristic, it is considered a new product therefore the existing inventory cannot be sold to your customers because essentially it is not the same product.

The inventory is automatically sold off to a trading company at a given percentage of the transfer cost and a loss is incurred.