BEER GAME Essay Example | Topics and Well Written Essays - 750 words

BEER GAME - Essay Example Furthermore, during cold weather the demand declines drastically thereby increasing the cost of manufacturing the product. Businesses exist in self-sustaining cycles. When the demand for a product changes the prices of other complimentary products some of which are useful in the manufacturing process changes as well thereby compounding the challenges facing a business, the supply of bottled water for example uses such products and services as plastic bottles, branding and transportation among others. The nature of the product makes it susceptible to climatic conditions since they influence the demand thus compounding some of the supply challenges (SILK, 2006). The transportation cost for the bottled water is likely to increase during warm water as the demand for the product increases regionally. This implies that demand increases even to the transporters a feature of the business that is likely to increase the cost of conducting business thereby increasing the price of the product. D emand for bottled water increases during special occasions such as end year parties, graduations and sports among others. The demand for the product stays either constant or declines in the absence of such social gathering. The impromptu arrangement of some of the social functions makes it challenging the supplier to increase the quantity of the product during manufacture and to organize for their transportation to the university in time. Additionally, most of such occasions last a day and attracts undetermined quantity of people. Such occasions as graduations and sports attract many people while some occasions such as seminars and class parties may not attract as much people. The periodic nature of the demand coupled with the unreliable size of the demand makes both manufacturing and transportation to the university more challenging (PRASCH, 2008). It is more challenging to change the quantity of the product for a day and organizing for their transportation to the market. The sudde n organization of some of the events makes it more difficult for the business to set up the necessary infrastructure to manufacture an increased volume and transport them to the market in time. The problem increases since the company must find market for the excessive market should it increase its production yet the demand fails to meet the quantity of the supply. Such excessive production results in losses for the business (FISHER, 2007). Graduation gowns Graduation gowns on the other hand have a more determined market. The products are essential to the students at the end of every academic year as the students adorn them in their graduation ceremonies. This implies that the supplier has a specified amount of time of both manufacture and supply to the university, additionally; the supplier operates closely with the institution. The supplier of graduation gowns therefore has a determined market. However, the business just as any other faces numerous challenges most of which arise fr om the nature of the demand (BURROW & BOSILJEVAC, 2009). The products are for example relevant only during graduations. This implies that the supplier remains out of business during the rest of the academic days. The demand for the product stays minimal during the rest of the days but rises abruptly during the graduation day. While the supplier

The Reasons Behind the Volatility of Agricultural Product Prices and Essay

The Reasons Behind the Volatility of Agricultural Product Prices and Other Questions - Essay Example The prices of agricultural products tend to be unstable because the supply of agricultural products changes from time to time, and this mainly depends on the variable weather conditions that affect the size of the harvest. According to a study carried out by Riley, he makes the conclusion that when the agricultural output falls short of planned output, for a given level of demand then the prices of products are bound to rise. On the other hand, Riley says that when the actual output is in excess of the planned output, for a given level of demand then the market price does fall (2006, p. 3). More often, the demand of a product has the effect making the value of the product higher when the supply for the products is low. Toepfer international carried out studies to determine the reasons for the price volatility of agricultural products. The study shows that there are three key market fundamentals. These fundamentals are responsible for the greater price variations of agricultural produ cts. The report states that agricultural output does vary from season to season due to the natural shocks such as weather and pests. They also state production in the agricultural sector does take time, so the aspect of supply cannot respond much to price changes in the short term and lastly, the supply and demand elasticity is small when compared to the issue of price. The agency explain that, during a supply shock, the variation between supply and demand need to be strong so as to enable the regaining of the balance of supply and demand this is fundamental when dealing with a case of low stocks (2011, p.5). The supply and demand shocks are a vital part when it comes to the determination of the prices of agricultural commodities. A clear example is the massive drought that hit Russia in the year 2010; this was accompanied by the restriction of the exportation of grains out of the black sea region. These circumstances massively affected the prices of commodities; there was a reporte d increase in the prices of agricultural commodities. In such times of high and volatile prices, most countries decrease their exports and increase on their imports. The end results of such measures is a destabilizing effect, for instance, the restriction of the exportation of rice by leading exporters in the year 2007 saw the tripling of prices despite the stable demand and harvest (2011, p. 5). The issue of price volatility in agricultural products has been of serious concern to most of the governments. In June 2011, the Agricultural ministers of the G20 gathered their ideas on how this issue could be addressed. Among the many suggestions, they focused on the launching of the Agricultural Market Information system this would enable the providence of timely accurate reliable and transparent information that would be of help in addressing the issue of price volatility. The Agricultural ministries of the G20 also suggests the strengthening of the international governance of agricultu ral trade in favour of an open, rule based and well functioning global market for agricultural products. The main reason for this is that the international trade contributes in the improvement of food security and in addressing the issue of price volatility. Many governments also have invested in the boosting of agricultural production by strengthening agricultural research and innovation. The establishment of well and functioning markets is also a strategy that focuses on the encouragement of the public and private sector t invest in agriculture (Toepfer International, 2011, p.6). A group of researchers observed that the instability of financial markets and the strong variations in the exchange rates are among