Supply and Demand Essay: Supply and Demand of Quaternary Ammonium Compound: Lysol all-purpose cleaner
Quaternary ammonium is a compound used as a low-level disinfectant for routine cleaning in hospitals against fungi, enveloped virus, and most bacteria. There has been an increase in the demand for disinfectants in general households, clinics, and hospitals driven by the Quaternary Ammonium Compounds market. The demand for Lysol All-Purpose Cleaner, a QAC, has increased since 2020 due to the COVID-19 pandemic due to the increased need for disinfecting and sterilizing surfaces in the healthcare setting. Therefore at the beginning of the COVID-19 pandemic, there was a massive upward movement along the demand curve of this commodity. Therefore, as the quantity of the Quaternary Ammonium Compounds demanded increased, the price too increased.
This is expected to continue over the next six years, and the Quaternary Ammonium Compounds (QAC) market is expected to rise to US$1.63 billion. Over the year, the demand for aerosol disinfectants increased by four hundred percent, with the online market increasing by 63 percent (Baker et al., 2020). The massive increase of the product at the beginning of the year 2020 involves the fact that some suppliers were hoarding the product in anticipation of increased demand for the commodity over the year.
Lonza Inc. increased the prices of Quaternary Ammonium Compounds by twenty percent before the onset of the COVID-19 pandemic. The manufacturers of this commodity have more control of the market relative to the consumers in healthcare facilities. This is because the QACs products high-value products, especially in the surfactant industry, making high-value chemicals. However, over time, the increased price has led to an increase in the supply for the commodity, thus leading to a slight upward shift in the supply curve. The upward shift in the demand curve would dominate the upward shit in the supply curve, thus leading to an overall increase in the commodity price.
Supply and Demand Essay: Lysol All-purpose Cleaner
The market price of a 19-ounce Lysol all-purpose cleaner increased from $4.25 to $9.15 over the first quarter of 2020. This was even though there was no change in the cost of production of this Quaternary ammonium compound (Baker et al., 2020). This can be attributed to the increase in the demand for the commodity during that period. Therefore there was a demand rise in the commodity, thus making the demand curve shift to the right.
This demand rise allowed the suppliers to increase the commodity’s price without the fear that the quantity demanded would reduce. Some government officials and members of the public pointed that this was unlawful exploitation of the consumers. However, this is evidence of the capitalistic marketplace whereby the marker forces determine the demand of a commodity. However, the Quaternary ammonium compound had become a necessity in the hospital setting.
Supply and Demand Essay: Price
The increased price of the commodity encouraged the manufacturers to continue supplying more of the commodity. Therefore the supply curve of the commodity shifted upwards, representing a supply increase. The suppliers would have the ability to supply a commodity whose price margin had also increased. However, the increase in the supply of the commodity was not significant enough to offset the price increase due to the increased demand.
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The manufacturers of QUATs were incentivized to ensure a constant supply of the product in the market. The impact of the COVID-19 pandemic on the Quaternary Ammonium Compounds (QAT) like Lysol all-purpose cleaner to have a dominant demand rise, something that is expected to increase over the foreseeable future. The government’s attempt to control the compound’s market effect may reduce the manufacturer’s supply, but the dominant demand rise would persist, leading to persistent high product prices.
Maximizing Profitability in the Supply Chain with Net Present Value (NPV)
Net Present Value (NPV) is a widely used financial tool that helps organizations make informed investment decisions. When applied to the supply chain, it can provide valuable insights into the profitability of a particular project or investment. In this article, we will discuss how NPV can be used in the supply chain and why it is a critical component of supply chain management.
NPV in Supply Chain: An Overview
Net Present Value is a financial tool that calculates the present value of expected cash inflows from an investment, minus the initial investment cost. It takes into account the time value of money, which means that a dollar today is worth more than a dollar received in the future. The concept of NPV is used to determine whether an investment is profitable or not, and it is widely used in the field of finance to evaluate the feasibility of investment opportunities.
In the supply chain, NPV can be used to evaluate the profitability of a particular project or investment. For example, if a company is considering investing in a new production facility, it can use NPV to determine the expected cash inflows from the investment, subtract the initial investment cost, and calculate the present value of the investment. This can help the company determine whether the investment is profitable or not, and whether it is worth pursuing.
Importance of NPV in Supply Chain Management
NPV is a critical component of supply chain management because it helps organizations make informed investment decisions. By evaluating the profitability of a particular project or investment, organizations can determine whether it aligns with their strategic goals and objectives. This can help organizations make better investment decisions and allocate their resources more effectively.
In addition, NPV can help organizations identify the optimal timing for investments in the supply chain. For example, if a company is considering investing in a new production facility, it can use NPV to determine the optimal time to make the investment. This can help the company avoid investing too early, when the market is not yet ready for the new product, or too late, when the competition has already taken hold.
In conclusion, NPV is a critical financial tool that can be used in the supply chain to evaluate the profitability of investments and projects. By taking into account the time value of money, it helps organizations make informed investment decisions and allocate their resources more effectively. It is an essential component of supply chain management, and organizations that utilize NPV in their decision-making processes are more likely to achieve long-term success in their supply chain operations.
Supply and Demand Essay Reference
Baker, N., Williams, A. J., Tropsha, A., & Ekins, S. (2020). Repurposing quaternary ammonium compounds as potential treatments for COVID-19. Pharmaceutical research, 37, 1-4.