If I might contribute a bit -
Even mall retailers have this sort of reasoning down. If you walk into Banana Republic, you'll see a company established size run because they have zeroed in on the market they're trying to attack in a profitable way. Having worked there for many years through undergrad, it doesn't make financial sense for the company to cater to an "extreme" minority based on sales trends, customer base, etc. Obviously, as a national chain they now have room to expand the sizing (Normally chest sizes of 38-44) because they can cover the odd jacket in a small or large size, but that was definitely not their starting point. And while SF distorts things a bit, the average male is not walking into Epaulet measuring a 36 chest and 27 waist. That sort of build is just not common in modern America, for whatever reasons others may want to include.
Anyways, sorry for all that.
Completely true. Statistics and a general operations or finance education support this. On the other hand so many retailers do this that there is an important niche for smaller and thinner sizes. Not that I'm saying it would be a good business model for Epaulet, but it is what Blue Owl on this forum does to some degree. Suit Supply has also expanded large numbers of smaller sizes. They can achieve profitability because of their large market share in this segment and larger numbers of stores to spread out the cost and achieve scale.
The special order compromise is an excellent solution, it mitigates the small scale with the surcharge without forcing other customers to subsidize.