Supply Chain And Demand Definition
In order to understand the term “supply chain and demand,” it is first necessary to understand the term “supply chain.” A supply chain is a network of facilities and distribution options that are involved in the process of transforming raw materials into finished products. The term “demand” refers to the quantity of a good or service that consumers are willing and able to purchase at a given price. The interaction between supply chains and demand results in what is known as the market equilibrium.
The market equilibrium is the point at which the quantity of a good or service that consumers are willing and able to purchase (demand) equals the quantity of a good or service that producers are willing and able to produce (supply). At this point, there is no incentive for either consumers or producers to change their behavior, because they are getting exactly what they want. Prices may fluctuate around the equilibrium point, but will eventually return to this point if left unchecked.
Supply chain and demand can be affected by a variety of factors, both internal and external. Internal factors include things like changes in technology or production methods, while external factors include things like changes in consumer tastes or government policies. These factors can result in either an increase or decrease in demand, as well as an increase or decrease in supply. When one of these factors results in an increase in demand, it is known as a “positive demand shock.” Conversely, when one of these
