Re:Why has Japan been hit with rice shortages, soaring price...
by bsder on Tuesday August 27, 2024 @05:38PM
(#41373376)
> Empty aisles, i.e. a true shortage, only happens due to an artificially low price
That's not true due to Always Late Inventory(tm). See: Covid and toilet paper in the US.
Because inventory is optimized to almost nothing, a demand shock can strip the shelves (the last remaining point of inventory) before pricing can adjust. Super-optimization means that supply has very little ability to increase and it would take many months to backfill the drained edge inventory. Prices shoot up, but don't actually make a dent as there is enough inelastic demand to always drain the incremental inventory resupply.
Add in the fact that a harvest is a specific point in time while consumption is continuous and it's really easy to wind up in a shortage situation that takes a remarkably long time to correct.
That's not true due to Always Late Inventory(tm). See: Covid and toilet paper in the US.
Because inventory is optimized to almost nothing, a demand shock can strip the shelves (the last remaining point of inventory) before pricing can adjust. Super-optimization means that supply has very little ability to increase and it would take many months to backfill the drained edge inventory. Prices shoot up, but don't actually make a dent as there is enough inelastic demand to always drain the incremental inventory resupply.
Add in the fact that a harvest is a specific point in time while consumption is continuous and it's really easy to wind up in a shortage situation that takes a remarkably long time to correct.