THE CONCEPT OF ECONOMIC SHORTAGES

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Economic shortage is a term describing a disparity between the amount demanded for a product or service and the amount supplied in a market. Specifically, a shortage occurs when there is excess demand; therefore, it is the opposite of a surplus. To figure out what economic shortages and surpluses are, we must start with the effects of supply and demand. Yes, I'm referring to supply and demand, but contrary to what most remember from their economics class in high school, not everything in economics has to do with supply and demand. In this particular case, though, we must go back to supply and demand. It's not going to be that bad though, I promise. You won't even need coffee to stay awake for it.  Economic shortages are related to price—when the price of an item is "too low," there will be a shortage. In most cases, a shortage will compel firms to increase the price of a product until it reaches market equilibrium. Sometimes, however, external forces cause more permanent shortages—in other words, there is something preventing prices from rising or otherwise keeping supply and demand unbalanced. In common use, the term "shortage" may refer to a situation where most people are unable to find a desired good at an affordable price. In the economic use of "shortage", however, the affordability of a good for the majority of people is not an issue: If people wish to have a certain good but cannot afford to pay the market price, their wish is not counted as part of demand.  Effects of Economic Shortage : In the case of government intervention in the market, there is always a trade-off, with positive and negative effects. For example, a price ceiling may cause a shortage, but it will also enable a certain portion of the population to purchase a product that they couldn't afford at market costs. Economic shortages are generally seen as undesirable since they lead to economic inefficiency. In absence of a price mechanism, resources are less likely to be distributed according to people's utility. Higher transaction costs and opportunity costs (e.g., in the form of lost time) also mean that the distribution process is wasteful. Both of these factors contribute to a decrease in aggregate wealth. More generally, regardless of their cause, shortages may result in: * Black markets - illegal markets in which products that are unavailable in conventional markets are sold, or in which products with excess demand are sold at higher prices than in the conventional market. * Artificial controls on demand, such as rationing. * Non-monetary bargaining methods, such as time (for example waiting in line), nepotism, or even violence. * Price discrimination * The inability to purchase a product. Examples: * In the former Soviet Union during the 1980s, prices were artificially low by fiat (i.e., high prices were outlawed). Soviet citizens waited in line (or "queued") for various price-controlled goods and services such as cars, apartments, or some types of clothing. From the point of view of those waiting in line, such goods were in perpetual "short supply"; some of them were willing and able to pay more than the official price ceiling, but were legally prohibited from doing so. This method for determining the allocation of goods in short supply is known as "rationing". Other examples of economic shortages include: * 1973 oil crisis, during which long lines and rationing were used to control demand. * Prohibition, which resulted in the creation of a black market for liquor. Whether an economic shortage of a certain good or service is beneficial or detrimental to society often depends on one's ethical and political views. For instance, consider the shortage of recreational drugs discussed above, and the controversies around the use of such drugs. Likewise, consider the economic shortage of cars in the Soviet Union during the 1980s: On the one hand, people had to wait in line to buy a new car; on the other hand, cars were more affordable than they would have been at market prices. A supply and demand graph has two intersecting lines (usually curved lines, but for simplicity we'll imagine two straight lines forming an X) where the demand line decreases left to right and the supply line increases from left to right. To put it simply, in the supply/demand X, the demand line is \ and the supply line is /. Where the two lines intersect is known as the market clearing condition where the optimal price (“market clearing price”) and optimal quantity (“market clearing quantity”) are reached. Simply put: both producers and consumers are theoretically at their happiest when it comes to how much is supplied and how much is demanded. An economic surplus occurs when the price is above the market clearing price. We've all been there: you go to the store to buy a product and see a ton of product on the shelves. You look at the price and say to yourself, “whoa, that's too much!” Just because the price is “too high” doesn't mean no one is willing to purchase it. It just means as the price increases, fewer and fewer consumers are interested in purchasing the product. To solve this problem, companies then reduce the price to increase sales and determine the market clearing price. The opposite is true for economic shortages. If a price is “too low” (i.e. below market clearing price) then more people are interested in purchasing it. No doubt you have seen this as well, when you find out, for example, that your favorite cereal is dirt cheap at the grocery store and when you go to purchase some, you find the shelf is empty. The cheaper the price goes, the more people are likely to purchase. In this case, a company will raise prices in order to reduce sales and reach the market clearing price. As you can imagine, there's no easy way to find the market clearing condition. Businesses track their sales very closely to ensure the price is not too high or too low since either one can result in potentially lost revenues. On the other hand, some businesses purposely create shortages in order to boost demand for products (e.g. Apple Inc.) because they know when their product is in demand, they can require a higher price. Most businesses do not do this, however, since purposely leaving the price low in order to create demand only works if you have a rare product (such as an iPhone). If you sell toilet paper or bread for instance, there is too much competition to warrant creating a shortage on purpose. To do so would just mean lost sales and possibly going out of business. There's plenty more to say about shortages and surpluses, but that covers the basics. To go deeper into it will require graphs, more economic terms, and perhaps a little caffeine. The important thing to remember is that an economic surplus means excessive supply and results in decreasing prices, while an economic shortage means excessive demand and will result in increasing prices.

INTRODUCTION TO OPERATION RESEARCH

INTRODUCTION TO OPERATION RESEARCH

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Definition and Scope:

Application of "scientific approach" in the study of Military Operations during World War-II resulted in a dramatic changes it's stand in the war. The scientists were asked to devise a well plan to increase the productivities and success rates on the battle ground. They have prepared algorithmic flow of scarce resources in an effective manner to various processes of military interest. Later on its use in other departments of sciences, goverment institutions and industries.

So we can say OR is concerned in co-ordinating as well as controlling various vital operations or activities within an organision. It can also be regarded as use of mathematical and quantitative techniques to substantiate the decisions being taken.

It takes tools from subjects like (i) Mathematics, (ii) Statistics, (iii) Engineering, (iv) Economics, (v) Psychology and other various minor subjects and uses them to know the "consequences" of possible alternative activities. But, it can also be described as "decision analysis".

So, we can also define OR as the science that is concerned with scientifically deciding how to design and effectively operate man machine systems usually under unfavorable conditions and with the help of scarce resources.

DEFINITION

" Making decisions or taking actions is central to all operations research applications."

O.R. is the art of winning wars without actually fighting. - Aurther Clarke

O.R. is concerned with scientifically deciding how to best design and operate man-machine systems usually under conditions requiring the allocation of scarce resources. -O.R. Society of America

O.R. is the art of giving bad answers to problems which otherwise have worse answers. -T.L. Saaty

O.R. is applied decision theory. It uses any scientific, mathematical or logical means to attempt to cope with the problems that confront the executive, when he tries to achieve a thorough-going rationality in dealing with his decision problems. -D.W. Miller and M.K. Starr

O.R. is a scientific approach to problems solving for executive management. -H.M. Wagner

O.R. is the application of scientific methods, techniques and tools to problems involving the operations of a system so as to provide those in control of the system with optimum solution to the problem. -Churchman, Ackoff and Arnoff

O.R. is the study of administrative system pursued in the same scientific manner in which systems in Physics, Chemistry and Biology are studied in natural sciences.

O.R. is scientific methodology-analytical, experimental, quantitative-which by assessing the overall implication of various alternative courses of action in a management system, provides an improved basis for management decisions. –Pocock

O.R. is the application of the theories of Probability, Statistics, Queuing, Games, Linear Programming, etc. to the problems of war, govt. and industry.

O.R. is the use of scientific methods to provide criteria for decisions regarding man machine systems involving repetitive operations.

HOW TO SOLVE NUMERICALS:

HOW TO SOLVE NUMERICALS:

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SOLVING  TECHNIQUES FOR NUMERICAL PROBLEMS IN MECHANICS

"To solve a numerical problem, the most important task is the initiation of the problem." Proper understanding of the problem would come if and only if we have the proper understanding of the derivation of the required formula. If some one studied those derivation using logic and applying a step by step tasks, then numericals become very easy to solve as the mathematical modelling is applied to solve those problems.

ALORITHMIC STUDY TECHNIQUES :

The technique to break up a complex tasks into a combination of several simple task can be achieved by algorithmic study. Like suppose we shall have to find the Resultant Force of a Force System that acts on a body.

If we want to solve this problem, first we shall identify/specify all the external forces of the Force System that acts on the body.

A force has two values to specify it distinctly. One is its direction, represented by the direction of an arrow and the 2nd one is the magnitude of the force represented by the length of the arrow.

Next, our task is to draw all those force using arrows to represent them. In this diagram, the object won't be drawn. Only the forces on the object would be drawn. Hence, it is aptly named as Free Body Diagram or FBD.

ANALYSIS OF FORCE SYSTEM:

Basic requirements or prerequisite knowledge needed to solve numericals on force system in 2 dimensions.

HOW TO DRAW FREE BODY DIAGRAM OF AN OBJECT WHEN A FORCE SYSTEM ACTS ON IT.

In the FBD we shall show the External Forces that act on the object. Here, one should careful enough as we shall show weight of the object as an external force.

HOW TO RESOLVE A FORCE OR RESOLUTION OF A FORCE ALONG X-AXIS AND ALONG Y-AXIS.

Let the force makes an angle ø with horizontal, then X-component or component force along X-axis will be F.Cosø and along Y-axis its component will be F.Sinø.

RESULTANT FORCE OF A COPLANAR CONCURRENT FORCE SYSTEM.

Whenever more than two forces act on a particle simultaneously laying on a plane, then they are termed as Coplanar Concurrent Force System.

As forces are vectors and two vectors of same kind can be added, hence, here also we shall obtain a resultant force of the force system comprising a lots of forces passing through a point and laying on the same plane.