2) If you change a production line you LOSE the efficiency. That is the most important example where you SACRIFICE "overall IC produced". You can call this a "waste of IC" because you'd have a lot more "overall IC produced" if you never change a production line.
3) That's why optimization on "overall IC produced" alone isn't leading anywhere.
I once saw a screenshot in an AAR of someone's production window. The player in question was still producing Interwar Fighters despite the pop-out where you choose the equipment for a new production line showing that he already had 1940 fighters researched. The reasoning he gave for this was that if you change your production line to the new fighters, you lose efficiency and losing efficiency is bad, because you will end up producing fewer fighters. I believe that player learned a lot from critiques of his strategy in that AAR thread, but I'm going to use it as an example here anyway. This thread demonstrates the same logic as that original screenshot.
The math in the OP is correct, given the constraints. I'm going to ignore the unrealistic constraints for the sake of this argument though, and pretend they make perfect sense.
The conclusion that can be drawn from the math is NOT that you should never build civilian factories. The conclusion that can be drawn from the math is ONLY that you will have more total equipment produced until date X if you build only MIC from day 1. This is different from the OP's stated conclusion in his PDF and in the thread title.
Even if all his assumptions didn't take away from the relevancy and were 100% applicable to a real game, the goal of the game isn't to have the most total equipment produced by date X. The goal of the game is to WIN, and winning is rarely as simple as having the most total equipment produced by date X.
To go back to the example of the AAR thread, upgraded 1940 fighters will shoot down interwar fighters at a rate upwards of 30 to 1. It's not helpful if you have 30,000 interwar fighters and your opponent was only able to produce 4,000 1940 fighters by 1940. The 4,000 1940 fighters will still win in the end even if the country producing them had less overall IC produced throughout the game. I realize that this is just one example of a rather extreme case in tech disparity, but the logic applies to the rest of the game as well. As
@Zauberelefant mentioned in his post about German strategy, Germany doesn't need to produce many guns because of all the equipment they gain from captured stockpiles. But those free guns aren't counted in IC production, and most guns built by Germany in the interwar period will be excess when these free guns are taken into account. OP has agreed that building up more factories to increase production later of critical technologies is a "special case" where it makes sense to build some CIC first. However, he also claims that these critical techs are only important on a nation-specific basis, and can be discounted from a general model. The true fact of the matter is that every single nation needs many of the same critical techs if they want to win the war. FIghter 2+, 1941/43 tanks of some variety, amtracs, naval variants, CAS 2, take your pick, every country needs at least some of these to be successful. It's impossible to discount as a special case something that is relevant to literally every country.
A common thread I see in the OP's replies to others is that he sees every counterexample as a special case, and that his generalized conclusion in the OP is applicable for all but some special cases. I would like to postulate that there is never a one-size-fits-all solution for every country, every single country is its own special case, and there exists no way to make a coherent claim that building either CIC or MIC is always the better option for
winning the game. I've already mentioned earlier in this thread, out of the seven majors in the game, I would build MIC first on two of them, CIC/MIC on one of them depending on game plan(and still at least some CIC, just not as much as for other countries), and CIC first on the other four. My most common build, CIC for at least two years, is only done 100% of the time on 4/7 of the major nations, which is barely a majority and hardly enough of one to be able to draw sweeping generalizations from.