Research Proposal: Business Analyzing Supply and Demand

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Business Case Study

Analyzing Supply and Demand in Mrs. Acres Homemade Pies

Looking at individual case studies helps develop a strong business sense. For example, by looking at the options Shelly Acres has concerning her pie making company can help explain larger notions about the theory of supply and demand, and how principles within that theory can help create strategic business decisions. As Shelly finds herself unable to meet demands of her product, she is faced with three options: expanding the facilities without raising prices, contracting production to an external source, or to maintain current production levels and raise prices. Out of all three, the smartest move is to raise prices until the supply equates demand.

Shelly Acres made a business out of selling her grandmother's infamous home made pies. The original family recipe proved to be incredibly popular and profitable for Shelly Acres and her newly established company Mrs. Acres Homemade Pies.

"The company produces specialty pies and sells them in local supermarkets," (Hirt & Ferrell 30). In the first thee months, Shelly sold 2,000 pies for $4.50 each. This brought the company a net profit of $1.50 per pie. However, demand quickly rose and she couldn't keep up with the current production levels that comprised the supply. She then expanded operations by adding more employees and borrowing money to buy new equipment and now makes 8,000 pies per month and takes home $12,000 a month. Yet, Shelly's business still continued to rise; "However, demand for Mrs. Acres Homemade Pies continues to accelerate beyond what Shelly can supply," (Hirt & Ferrel 30).

There are several options Shelly can take to help equalize the supply and demand levels. The first is to expand the facilities without raising prices. Doing so would expand the production potential and increase the supply to meet the demand, without altering the price which has already been proven successful. This would keep the loyal customer base and provide a better capability for production, but also presents several problems. There is no guarantee that demand will continue to rise, so borrowing more money may prove to place the company at a disadvantage. Thus, this option may present future problems that could have easily been avoided by working through another strategy to level supply and demand. The second option would be to contract a third party to help increase production. For a percentage per pie, production can be dramatically increased and prices can stay level to what they have been before. However, this proves to have some faults as… [END OF PREVIEW]

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Cite This Research Proposal:

APA Format

Business Analyzing Supply and Demand.  (2009, October 29).  Retrieved December 7, 2019, from https://www.essaytown.com/subjects/paper/business-case-study-analyzing-supply/6253

MLA Format

"Business Analyzing Supply and Demand."  29 October 2009.  Web.  7 December 2019. <https://www.essaytown.com/subjects/paper/business-case-study-analyzing-supply/6253>.

Chicago Format

"Business Analyzing Supply and Demand."  Essaytown.com.  October 29, 2009.  Accessed December 7, 2019.
https://www.essaytown.com/subjects/paper/business-case-study-analyzing-supply/6253.