Economic principals & making of decisions

Economic Principles and Decision Making

Economic principals & making of decisions

Table of Contents
Introduction ..................................................................................................................................... 3
Interpretation of effective supply and demand for organizational problem solving ....................... 3
Business forecast complex variables which consist of demand, supply and costs ......................... 4
Demand ..................................................................................................................................................... 4
Supply........................................................................................................................................................ 4
Production................................................................................................................................................. 5
Costs .......................................................................................................................................................... 6
Analysis of the production processes and cost functions................................................................ 6
Phillips Curve Analysis................................................................................................................... 8
Laffer curve Analysis ...................................................................................................................... 9
Governmental interference in the business economy ..................................................................... 9
Conclusion .................................................................................................................................... 11
References ..................................................................................................................................... 12
Economic principals & making of decisions

Introduction
The assessment provided is referred to the analytical progress that has been rendered up on the
deeper suggestive quantitative and qualitative judgments of the interpretation. The segments
consist of the deeper insight of the demand and supply forecast forum of the economics.
Furthermore, the chains of production and upgrading use of technology for the monitoring are
also a suggestive nature. However, the deeper insight might be varying in nature but its objective
for private firm development is evident and the chain process is relevant to the evidence of the
development.

Interpretation of effective supply and demand for organizational problem

solving
The solution to an organizational problem starts with the steps of finding the problem that has
been causing the disturbance. It stands out to be the most difficult part as they don’t seem to be
what is shown to be the problem is. The problems that can be seen are dependent up on the idea
that has been implemented. The rigid symptoms include both reflects and mirrors below lying
organization’s issues. Finding the problem is the gamble which is the valuable play scope which
is obvious sometimes and other than being subtle and foreseeing, rising after only the longer step
from searching and eradication. Firm’s issues, further detected, are self-proving, and not
appearing in the starting. The 2nd step being the formulation of the problem is tough reasoning
of it is always consist values which are surfaced and need to be dealt with for creating a share of
understanding about what has been going on and how to make improvisation (Christopher 2016).
Fir has many holders of stake with different values and objectives. The employees more security,
wage, and health benefits to do their work properly. The government requires tax benefit
revenues that have been manufactured by the organization. The respective bankers and the
creditors would thrive to get paid. Environmentalists would like the government to spend more
on the environmental issues for pollution eradication. Suppliers demand continued businesses,
Buyers ask for more services with the best quality at lower prices. The competitive pricing and
set aims shall be taken under consideration when simplifying for the formulation of the issue that
need to get resolved. The 3rd stage would be the decision making for the organization which is
one of the crucial stages. This stage is comparatively simpler, where the previous stages have
competed accordingly, the 3rd stage conclude the selection of the best available alternative
provided under the specific circumstances and constraints surrounding the problem. The new
structure provides the new insights for creation of new solutions to the recognizable unsolvable
problems. The fourth stage is the implementation of the solution to the problems oriented which
involves the planning of the actual implementation that’s has been deployed in the entire
organization thoroughly. This is the step where the tire meets the concrete. There are always
issues in the implementation of a solvation designed to improve a firm. This is the place where
the theories and the concepts clash and smashes the rocks of the reality. Where the detailed
attention is required is what shall be the matter upon the correlation between the solutions along
Economic principals & making of decisions

with the reality that shall be taking place. The 5th stage is the audit review for the results of the
solutions that has been deployed. The concept here is to monitor the deployment of the ideas and
concepts into the organization (Christopher 2016). The Audit review is vital as it is one the
important key issue which helps to review the products and provides suggestions for
improvement of the four earlier stages.

Business forecast complex variables which consist of demand, supply and

costs
Demand
Quantitative methods of forecasting demand can be categorized under the following sequences:

Trend Analysis: This is a process of sales data forecasting when an upward definite or
pattern headed downward comes into existence. The model consist double smoothing
exponential, smoothing triple and regression.

Adjustment of seasonal analysis: This model takes away an account the demand
differentiation from season-to-season; it is possible to make adjustments to a forecast of
baseline for predicting the demand impact which is seasonal. .

Decomposition: A method of where data and time series are distinguished into three
separate components:
Trend, seasonal, cyclical; Trend consists of the generally upward horizontal or downward
movement over the time, seasonal states the recurring deposit demand such as the
weekly, monthly or quarterly, the cyclical includes the repeating and the non-seasonal
pattern (Christopher 2016). A fourth component is quite random, which is data with no
pattern. The new forecast is made by projecting the patterns individually determined and
then combining both.

Graphical methods: Illustration of information in the graphical form, relatively easier to

convert a spreadsheet into a graphical representation which further results the date
presentation in the see-able sense. The patterns and trends are much easy to spot and shall
be successfully used in prediction of the future course of demand forecast category

Supply
The process of forecasting the purpose of supply identification is to determine the number of
employees required for each purpose involving knowledge, skills, abilities, and other traits. The
Economic principals & making of decisions

supply requires a major involvement of the labor forces which states an internal and external
supply forecast. The internal forecast relates to the condition inside of the distinguished
establishment like the distribution of age of the labor force, termination as well as retirement.
The forecast of the supply external states the relation of the worker-market situations and
prediction of the worker supply to be available in the future when the firm requires from
potential resources. The major factors affecting the supply forecasts are the: supply and demand
of the job and skills, educational attainment levels within a regional space, graphical forecasting
of economic growth, compensation based one experiences, education, and occupation (Hugos
2018). There are also some factors that affect the Major internal supply of the organization such
as the organizational features which involves staffing capabilities, the rates of production and the
changes that is required or previously implemented. Rates of demotion, transferring, promotion
of the workers, and the major turnover are also consisted in the internal factors of supply
forecast.

Source:

Production
Production is the key feature of any profit oriented establishment. The below list states some
factorable techniques:

Brainstorming method: It is used to forecast demand, most importantly for new

products oriented (Hugos 2018). This method is where many experts sit aside and
provides advice with an idea and reasons their idea. One idea generates many more ideas.
The group of experts will be developing much more ideas than one person. Demand can
be forecasted based on these ideas.
Economic principals & making of decisions

Goal oriented forecast: A goal is fixed for this technique, and the technological
developments required for achieving the identified goal. After some period, a forecast is
being made when these technological developments takes place in the future.

Matrix Method: This is the combining factor of more than one or two matters which
combine to the manufacturing of the process oriented (Hugos 2018). Theis is made by
using advance technology, production function and the factor of time. It’s a subordinate
technique used which is tangible so that it can adapt itself when the time changes. This
formulation is adopted and only used by larger companies. The reach for this technique is
quite rational and livid and can be considered a high end technique adopted.

Costs
Supposedly there is a project which is a lot behind of schedule and an aim to conquer the
ultimate project deadline with less available resources to reach the deadline, the incorporation of
the SPI into the ETC. This returns in a formulation which has been estimating the extra cost of
the remaining work in the ETC. The formulation is

Source:

The forecast of the costing for the reason of designing the manufacturing of the utilities which
shall be based only on the matter of consumption for the number of students who will be taking
the course, the cost of materials and labor forces, and finally the produced number of courses
(Gansterer 2015). Variable costs are those which are depended on number, quality and the size
of courses and who are depended on the amount of plus course students.

Analysis of the production processes and cost functions

The production process refers to various sorts of allocated resource utilization. Production
process is the method of producing something by using other various factors of production.
Some of them are:
Economic principals & making of decisions

Job production: This refers to the creation of singe item. It is applied to typical unique
items or things that possess low demand value.

Batch production: This refers to the production of number of items in a batch, like 1000
pastries that’s moves through 6 or more steps together, step by step to produce and turn
them into a final product (Gansterer 2015). The benefits of the batch production have its
own form of advantages:

 Particularly perfect in a varied form of likely items, which could be used with the
exact machinery under different applications
 A responsiveness from the unit is quick to the customer order by moving work in
progress stocks to the completed products into final products
 It makes the scale in techniques of production possible
 Makes the costing very easy and gives far better information for management

Mass production: This type refers to the continuous production of proposed item. It
involves a sequence of workstations that can all be used at the same time required.

Mass customization: This form of production refers to the production line that produces
unique items to customer specifications (Gansterer 2015). This involves the requirement
of advanced technology that possesses a unique item for each production purpose.

Service production: this refers to the delivery of a service also considered as a

production. Like the operational process which are widely required for a bank to offer a
24-7 service.

Craft production: This type of production doesn’t use automation, like a suit tailored by
a tailor providing a production service enhancement.

Flow production: For the flow production to become successful, it needs continuation of
a demand forecast. If there is a variation in the demand, it would result in overstocking of
the final good. The benefits of the flow production have its own form of advantages:

 Just in time techniques for an ease of use to eradicate waste and lessen the costs
 Labor and other costs of production would get reduced with the help of using
robotics and automotive.
 The requirement of storage space is less
 The physical labor needed to handle items is less
 The control is far more easy and comprehensive
Economic principals & making of decisions

Phillips Curve Analysis

Supposedly the level of price increases in the economy due to the increase in the aggregate
demand, there would be an inflation of demand pull in the economy. Demand for inflation in the
form of pull inflation is good enough for the economy as who are supplying are intimidated to
give more of the commodity and services in the economy. Nevertheless, as the economy is
expanding various sectors of the economy is also expanding. With the prime flourishing of the
different sectors, the level of the demand for the factors is also expanding. The modern economy
states, capital and labor are considered as the factors which are complimentary despite of the
substituted factor. Thus, the both factor are on demand increases as the production process
increases. And due to this increasing factor of demand, the employment opportunity in the
economy is also increasing. Furthermore, the inflation which is demand pull is well enough for
the economy as it has a plus/positive impact o the employment opportunity. Inflation has a
negative impact on the economy if it is perhaps driven by costs. If the production cost rises, the
level of production in the economy falls. Furthermore, if the government of the economy
implicates the minimum amount of wage law, organizations are bound to pay the level of
minimum salary to every employee. However, there are both sets of unskilled and skilled
workers in the company. Despite lower productivity, they have to be paid the level of minimum
amount or higher wages, which builds a hectic pressure on the employer and reduce profitability.
Thus the firms make a decision to overturn the low skilled labor/worker due to salary hike.
Supposedly there happens to be cost push inflation in the economy, the rate of unemployment
rises. The phillips curve indicate the relation which is negative between the rate of inflation and
the unemployment rate. Nevertheless, the rate of unemployment is fixed in the long run.

Source: (Gansterer 2015)

Economic principals & making of decisions

The diagram illustrated above indicated the short run if the measure of low inflation is taken, the
level of employment rises. The reason is the low price, the level of production falls and hence,
the labor demand falls. If the level of unemployment is intended to be kept low by the
government, this is ought to be done at the rate of higher cost. Hence, in the longer run, both the
buyers and the organization maximize their adjustment with the level of price and the
unemployment rate backs at the nation’s level of unemployment.

Laffer curve Analysis

The cultural theory of the laffer curve implicates the relation between the rate of tax that has
been imposed by the authorized government and the revenue that has been generated from the
taxation. The tax imposition majorly has two of its effects likely to be the economic effect and
the arithmetic effect.

Source: (Gansterer 2015)

Governmental interference in the business economy

Government’s intervention in market is to impose inefficiency. The optimum efficient market
resources are adequately allocated to them who need the amount they require. In the markets
which are inefficient, some may have too much of a resource and some might not have enough.
Economic principals & making of decisions

This form of inefficiency is various. The government takes part in this market to fight the
inequality through regulation, taxation policy, and subsidies (Gansterer 2015).

Maximizing social welfare: In an inefficient unregulated market, gangs and other form of illegal
establishments can impose monopolistic power, raising the cost of entry and decreasing the
development of social reform and structure. Without regulation, businesses would be producing
bad externalities without consequence. This would lead to diminished resources, stifled
innovation, and minimal trade and its benefits. Government intervention through regulation can
directly address these issues. Specific over the time used goods, like public gardens, is cannot be
owned by any person. This implicates to no money can be useful to the use of that commodity
and everyone can use it equally. Thus, it gets easier for these public assets to use over and over
again. Government takes part to validate those resources is not usable.

Price ceiling: This is the price control machine which limits the maximum amount which can be
used for a good or a service rendered. These ceilings are generally set by the governments. The
main objective of the price ceiling is to protect the buyers from a specific commodity or a service
they rendered. Through the establishment of the minimum price, the government wants to assure
the good is affordable for as more people possible.

Source:

If a price ceiling is set below the free-market equilibrium price (as shown where the supply and
demand curves intersect), the result will be a shortage of the good in the market (Zeuthen 2018).
The dead weight loss, represented in yellow, is the minimum dead weight loss in such a scenario.
Economic principals & making of decisions

If individuals who value the good most are not capable of purchasing it, there is a potential for a
higher amount of dead weight loss.

Conclusion
The overview of the assessment suggests an introspective notion of how the economic platform
of a business on how it runs with advantages, disadvantages, profits and losses, problems under
new authority and deployment of concepts under the strategic data analysis and monitors the
effectiveness of the deployed concepts (Cohen 2018). Furthermore, the assessment also
monitors the different segments of job attractions and forces which includes internal and external
economic forecast. This also denotes the quantitative of demand and supply forum under the
forecast which consists of the trends, seasonal deployment forecast and various other segments
that’s need to get value and a deeper knowledge on the Economical sociology of an organization.
Economic principals & making of decisions

References
Jiang, B., Tian, L., Xu, Y., & Zhang, F. (2016). To share or not to share: Demand forecast
sharing in a distribution channel. Marketing Science, 35(5), 800-809.

Sanjari, M. J., Karami, H., & Gooi, H. B. (2016). Micro-generation dispatch in a smart
residential multi-carrier energy system considering demand forecast error. Energy Conversion
and Management, 120, 90-99.

Christopher, M. (2016). Logistics & supply chain management. Pearson UK.

Hugos, M. H. (2018). Essentials of supply chain management. John Wiley & Sons.

Syntetos, A. A., Babai, Z., Boylan, J. E., Kolassa, S., & Nikolopoulos, K. (2016). Supply chain
forecasting: Theory, practice, their gap and the future. European Journal of Operational
Research, 252(1), 1-26.

Cao, Q., Banerjee, R., Gupta, S., Li, J., Zhou, W., & Jeyachandra, B. (2016, June). Data driven
production forecasting using machine learning. In SPE Argentina Exploration and Production of
Unconventional Resources Symposium. Society of Petroleum Engineers.

Gansterer, M. (2015). Aggregate planning and forecasting in make-to-order production

systems. International Journal of Production Economics, 170, 521-528.

Zeuthen, F. (2018). Problems of monopoly and economic warfare. Routledge.

Cohen, B. J. (2018). The geography of money. Cornell University Press.