I can't say I know the details of Peter's manufacturing operation, but I'd think it has to do with two important considerations in business.
First: the size of a production run. Demands of the mechanics of producing an item and the labor dictates a cutoff point. Anything less than that cutoff point is unprofitable or impractical.
Second: Turn over. Just as with any investment, the time it takes to draw an expected profit is a factor as important as the profit itself. It is unprofitable to store and handle an item that doesn't draw a profit rapidly enough to pay the labor, overhead, and permit a growth in the investment.
If the dictates of a production run generates a larger inventory than is practical for reasonable turn over, you lose money. A minimum quantity order that meets the demands of a product run satisfies both considerations.