Purchase Solution

Effect of Cancellation of Orders on Demand

Not what you're looking for?

Ask Custom Question

Steel producers expect to cut output by 10 percent in 2009 in response to cancelled orders from construction companies and car and household appliance producers. (Source: Financial Times, December 28, 2008.)

- Does the cancellation of orders change the demand for steel, the quantity demanded, the supply of steel, or the quantity supplied?
- What happens to the equilibrium price of steel?
- Draw a graph to illustrate

Purchase this Solution
Solution Summary

This is a discussion of the effect of the cancellation of steel on the quantity supplied and demanded for steel. The expert determines if cancellations of orders change the demand for steel, the quantity demanded, the supply of steel or the quantity supplied. A graph is illustrated.

Solution Preview

The cut in steel production in 2009 was brought about by the dampened demand for steel by the automotive and construction sectors. This will surely result in a corresponding cut in output by steel makers. The cut in supply and demand for steel will either increase or reduce the price.
This is graphically ...

Purchase this Solution
Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

View More Free Quizzes
Related BrainMass Solutions

  • Xerox machine lease

    The total revenue-test relates to the effect of price changes on total revenue and thus on profits. In the special case of unit elasticity, an increase in price leaves total revenues unchanged.

  • Operations management - Supply chain management & the bullwhip effect

    The term bullwhip effect refers to the magnification of demand variability as orders move up the supply chain. Procter and Gamble executives coined the term after studying demand for Pampers disposable diapers.

  • Supply Chain Theory Simulation

    Promotion is the source of bullwhip effect since demand is subject to frequent variation in demand. References Lee, H.L., Padmanabhan, V. & Whang, S. (1997). The Bullwhip Effect in Supply Chains. Sloan Management Review, 38(3), 93-102.

  • Bullwhip effect

    The bullwhip effect can be reduced by effective information sharing across the supply chain. The main cause of the bull whip effect is because the entities downstream do not have an accurate representation of the demand upstream.

  • Logistics/ Supply Chain Management

    Step 1 The first challenge that logistics faces as it manages on a process basis is that there is a demand for full transparency of their orders.

  • Supply Chains & System Dynamics

    (1) What is your opinion on the questions below? The bullwhip effect results from changes in inventory that are directly affected by levels of demand.

  • Vendor Managed Inventory and Bullwhip effect

    There is limited interaction between buyer and seller in the form of physical delivery of goods and payment in cash and more orders. This lack of visibility on the end customer demand leads to bullwhip effect.

  • Nichols Company

    Marketing complained that delays in delivery and lack of finished goods inventory led to cancellation of orders and lower sales. Accounts stressed the need to keep inventory levels low as higher levels led to higher costs.

  • analyzing a company's supply chain

    239100 Supply Chain charts: best value to customer; correct problems; effect solutions View the file attached for charts. Can you assist me with an explanation of the follow 3 questions based on the attached charts. 1.

View More Related Solutions