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Feb 20, 2024

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First Last Name SCLM446 1.1 Supply and Demand 3.1 Supply & Demand Case Study Supply and demand are essential for the economy as it influences prices for goods and services. The law of supply and demand explains the relationship between a seller and buyer and the price that each are willing to buy and sell. When goods or services are priced higher, sellers are more willing to sell the goods but demand decreases. When prices are low, demand from buyers will be higher. As you can see, supply and demand work together and if these are not aligned, there would be several implications. One issue is if supply is more than demand. In this case, manufacturers would have to stop production as inventory is not being sold as anticipated and it would be an improper use of resources and labor. The company is at risk of major loss from labor and supplies with no sales. Additionally, costs would increase significantly if there is a higher demand than what sellers can supply. Sellers would increase costs for a few different reasons. One being because they can and the second reason is that if the demand is higher than anticipated, there may be issues within the supply chain to fulfill the demand and therefore harder for the seller to source needed components. For example, during the covid19 pandemic where a lot of companies were shut down while also sending other companies to work from home, there was a huge demand for electronics. The demand was also increased as many consumers had more personal time at home and more gadgets and electronics were purchased for personal use. The pressure of this demand with the sudden stopping of many manufacturers led to the chip shortage of 2021. Many companies are feeling the pressure as business continues for some where others had to close their doors for good during the shutdown. This caused sellers to have to source from other suppliers. This demand has caused suppliers to attempt alternative solutions to get products to consumers quickly before their competitors. The concern with this is that these solutions could lead to poor quality from last minute changes and no time for quality control inspections. The pressure for production also requires more labor with ultimately increases operating costs and creates a higher cost of production. In the case study for the global chip shortage, the article claims that rather than looking abroad to fulfill this supply shortage, companies are looking to become more “self-reliant” because there is no one size fits all component and in order to meet the demand of the new technology and different devices, we would need trillions of devices. Creating chips is an extremely complicated and sophisticated process. When production came to a halt but consumers needed the devices more than ever, it created the supply and demand imbalance that is now known as the Global Chip Shortage of 2021. Not only has this impacted supply and inventory for NEW products from cars, computers to video game consoles being released but it has also impacted the repair of old equipment. Currently with the shortage, you will find a hard time finding a new PlayStation console with out paying double the retail price. Additionally, because of the chip shortage it is going to cost more than regular to repair an old console and will also take a lot longer as there is a long queue with consumers and businesses waiting to get new chips and components.

“ No longer are countries looking to the globalization process as it pertains to semiconductor chips production. In fact, many countries, including the U.S., are now striving for a self-reliant production model. It may sound like an easy solution, but it’s more of an uphill battle requiring new infrastructure and a healthy supply of capital (McCloud, 2021) . “ compare and contrast supply and demand considerations for over-the-road transportation. Summarize your thoughts in a MS Word document. Your answer should be at least 500 words in length. References Kamauff, J. W. (2010). Manager's Guide to Operations Management. New York: McGraw-Hill Professional. McCloud, A. (2021, May). Supply and demand: A closer examination of the global chip shortage . Retrieved from Ksat.com: https://www.ksat.com/news/local/2021/05/24/supply-and-demand- a-closer-examination-of-the-global-chip-shortage/

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