There was a lot written about this in the 1990s during the rise of globalization and just in time supply chains.
Basically, you build a big warehouse and keep it full when prices are below projection.
This is equivalent to investing capital at a negative interest rate, so it’s not done anymore. Instead, the system is designed to pass supply shocks on to the consumer when possible.
I’ve noticed the local grocery stores have started replacing shelf price tags with little computers so they can reprice food in real time. (And hire fewer stock people),
Anyway, the keyword you want is “just in time supply chain”.
> This is equivalent to investing capital at a negative interest rate, so it’s not done anymore.
Stupidity of financializing everything. There’s no amount of money in the world that can quantify the safety of having critical items like food in supply. You can’t eat money. If everyone builds “just in time” supply chains the world collapses after a single shock.
but there's finite resources. cost-benefit analysis still makes sense. there are things that consumers can easily substitute.
for example meat is a high-quality but luxury source of protein, as in it's expensive, but people like it a lot so they pay a lot for it, see beef prices, but except specific allergies everyone can switch to poultry, fish, or plant-based protein sources easily, as in anyone people who prepare food at home can easily prepare a different one, restaurants can switch too, etc.
but there are products with very fragile supply-chains, like baby formula (breast milk is not always available/possible), but there are not a lot of domestic producers, and there's some typical political meddling with it (since it's critical there's a lot of subsidy for it, and since it's quality controlled it's not easy to enter the market, since it's FDA controlled you can't just import it), yet there's no mandatory stockpiling. it would push up the price. how much? who knows. depending on how perishable the product, how much would it cost to warehouse it. should this be done with public money? should this be one more regulatory burden? yet more cost-benefit questions.
You type in a normal profit and loss account, prior year might work, forecast is better. Then you see how your freight cost changes from sea to air by getting a quote from your freight company of choice. If it is 5% more then change the freight line in your p&l to be 5% higher. Are you still profitable?
There was a lot written about this in the 1990s during the rise of globalization and just in time supply chains.
Basically, you build a big warehouse and keep it full when prices are below projection.
This is equivalent to investing capital at a negative interest rate, so it’s not done anymore. Instead, the system is designed to pass supply shocks on to the consumer when possible.
I’ve noticed the local grocery stores have started replacing shelf price tags with little computers so they can reprice food in real time. (And hire fewer stock people),
Anyway, the keyword you want is “just in time supply chain”.
> This is equivalent to investing capital at a negative interest rate, so it’s not done anymore.
Stupidity of financializing everything. There’s no amount of money in the world that can quantify the safety of having critical items like food in supply. You can’t eat money. If everyone builds “just in time” supply chains the world collapses after a single shock.
but there's finite resources. cost-benefit analysis still makes sense. there are things that consumers can easily substitute.
for example meat is a high-quality but luxury source of protein, as in it's expensive, but people like it a lot so they pay a lot for it, see beef prices, but except specific allergies everyone can switch to poultry, fish, or plant-based protein sources easily, as in anyone people who prepare food at home can easily prepare a different one, restaurants can switch too, etc.
but there are products with very fragile supply-chains, like baby formula (breast milk is not always available/possible), but there are not a lot of domestic producers, and there's some typical political meddling with it (since it's critical there's a lot of subsidy for it, and since it's quality controlled it's not easy to enter the market, since it's FDA controlled you can't just import it), yet there's no mandatory stockpiling. it would push up the price. how much? who knows. depending on how perishable the product, how much would it cost to warehouse it. should this be done with public money? should this be one more regulatory burden? yet more cost-benefit questions.
https://en.wikipedia.org/wiki/2022_United_States_infant_form...
Yes but think of the shareholders! And that doesn’t show up nicely on a spreadsheet does it?
Excel normally
You type in a normal profit and loss account, prior year might work, forecast is better. Then you see how your freight cost changes from sea to air by getting a quote from your freight company of choice. If it is 5% more then change the freight line in your p&l to be 5% higher. Are you still profitable?