Thursday, March 19, 2020

Supply, Demand, and Systems Thinking; Why Are We Out of TP?

Why are we out of toilet paper?

TP takes up space. Most of the cost of TP may be because of the space it takes up. Stock is kept to a minimum under normal demand.

Demand increases suddenly:

Demand up.

Supply lags behind demand (demand leads):

Supply same.

What happens to cost?

Everyone wants to buy TP, but there is very little to go around. Some people may be willing to pay a lot for TP.

Willingness to pay up.

Does this drive price up?

Not necessarily. Stores may be willing to accept normal prices because it's the right thing to do. Price may not go up, but it could. Should it?

Price may or may not go up.

Can supply increase to meet demand?

Supply is complicated. First, there's the manufacturing of toilet paper. They have machines and people to make a normal supply. Maybe they can make more all of a sudden, but maybe not.

What is toilet paper made from? TP is made from tree pulp. They need more materials to make more TP. Maybe they have enough trees and pulp to make more. If they don't, it means the source needs to process more trees.

Lumberjacks and processing plants need to increase the supply of raw materials — the wood pulp from cutting down trees. This takes time, trucks, and more machinery. They may not have the excess capacity.

What will it take to increase capacity to make more TP?

More raw materials - wood.

More people to work - lumberjacks, wood processing, TP making, cardboard tubes.

More machines - saws, wood Mill machines, pulp making machines, cardboard tube machines, TP machines, trucks to move the raw materials.

All of this takes time to build and coordinate. What happens when the demand for TP is back to normal? All this extra capacity goes to waste! Machines are expensive, it cost a lot to get workers trained.

Is TP the best use of space and resources? It doesn't even work that well! Suddenly the three seashells from Demolition Man are starting to make sense! Vaguely? Nah, they still don't make sense.