Question.4233 - The objective of this assignment is to help you understand how to apply the class models to the real world events. Each student will research and obtain one economic article or video that is related to demand and supply model. Some examples of good sources include Wall Street Journal, Economist, New York Times and CNN News. You must provide the link to the article or video. The article or video should be current and published within the last 6 months. You are required to write a brief summary of the article or video; then analyze it using demand and supply model. Please make sure to include your own understanding and explain how the analysis can help you make decisions. A demand and supply graph would be a plus. You can use the examples in section 2.7 of the textbook as a reference. Your assignment should be double spaced and a maximum 2 pages.
Answer Below:
Article Name“Supply chains are under plenty of stress, but they’re not breaking. Here’s why.” Article Linkhttps://edition.cnn.com/2024/09/03/economy/us-supply-chains-holiday-inflation/index.htmlSummaryThe present article has focused on the current state of the global supply chains, which, despite facing challenges such as the Suez and Panama Canal disruptions, a potential East and Gulf Coast dockworkers’ strike, and other logistical bottlenecks, have remained resilient. This article also highlights the lessons from past crises that have led to better supply chain diversification, proactive inventory management, and longer shipping routes to avoid major disruptions. Businesses have found it very difficult, and container prices have risen by 150% compared to last year. They found it difficult to pass these costs to consumers due to their increased price sensitivity. It has also been seen in the present article that the industry experts believe in the worst of the supply chain issues, although the concerns remain behind us.Analysis of Case Using the Demand and Supply ModelSupply Chain Disruptions as Negative Supply Shock: Events including geopolitical conflicts, canal blockages, and potential strikes that help reduce the supply chain efficiency. It also leads to higher shipping costs and limited availability of the products. It can be described as a decrease in supply shifts and the supply curve on the left, resulting in higher prices and lower quantitative variables from the economic perspective. Retailers’ Response and Inventory Management: Retailers have increased their inventories and shifted their cargos to alternative routes to encounter potential supply chain disruptions. The present article has shown how this supply chain disruption is reflecting the shift in supply chain strategy towards nearshoring as well as onshoring. These can come with higher initial costs but stabilize the long-term supply. Impacts on Customers’ Needs and Pricing Power: It has been found from the present article and with the help of a relevant model of the supply chain that the behavior of current consumers become more price-sensitive, unlike the situations during the COVID-19 pandemic. During that time, the firms could easily pass the costs to the customers. Therefore, it can be stated that the pricing power has been weakened for the present firms. Their ability has also been limited to increase the price instead of increasing the costs. Another interesting finding indicates that the demand curve remains stable or shifts towards the left if consumers reduce their spending due to high prices. Personal Understanding and Insights I have gained an in-depth understanding and insights about supply and demand. According to my understanding, companies need to continue diversifying supply sources and improving logistics efficiencies in order to mitigate the risks of geopolitical and environmental disruptions. In addition, I have also learned that these supply chain trends can have huge impacts on the customers to make anticipation against price fluctuations. These consumers can also be informed about purchasing decisions, including buying early before the hike in potential prices. From the economic outlook, I have gained insight into monitoring the supply chain's resilience. Labor negotiations also help predict inflation trends. It also has a huge impact on broader financial and investment decisions. References Edition.cnn.com, 2024, Supply chains are under plenty of stress, but they’re not breaking. Here’s why, Available at https://edition.cnn.com/2024/09/03/economy/us-supply-chains-holiday-inflation/index.html [Accessed on: February 2nd 2024]
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