Summary
Procurement and Supply Management summary
- Course
- Institution
A summary of Procurement and Supply Management, as part of Transport and Supply Chain Management on the VU.
[Show more]
Seller
Follow
merelgeense
Content preview
Lecture 1Procurement and Supply Management activities are driven by 4 complementary
perspectives/factors:
1. Society/Government: determine regulations
2. Markets: determine prices for goods and services
3. Suppliers: determine alternatives available for procurement
4. Internal factors: determine needs and resources available
Social surplus: a measure for welfare (governments want to maximaze)
- Total benefits - total cost
Potential Pareto improvement: A greater increase in benefits than cost or a larger reduction in
cost than in benefits
Consumer surplus: Total benefits – total expenditure
Producer surplus: Total revenues – total cost
Social surplus is
1. Total benefits (B) – Total cost (C)
2. Consumer surplus (CS) + producer surplus (PS)
Total benefits that market attach to the product: sum of maximum willingness to pay from all the
consumers who can buy the product
Total benefits
Total cost: sum of total cost of all consumers who can buy the product
Total cost
,Social surplus: difference between total benefits and total cost
Consumer surplus: total benefits - total expenditure
Producer surplus: total revenues - total cost
Social surplus = also consumer surplus + producer surplus
Loss of social surplus if the price goes up
WATCH OUT: not the red square
,Loss of social welfare if price goes down
WATCH OUT: not an increase of the red square
Marginal willingness to pay defines the (inverse) demand function
If the price is fixed on 300 and the Q is quantity demanded
Change in social surplus if cost changed from €300 to €500
, Change in social surplus if cost changed from €300 to €100
If the airline were a monopolist, which fee would they charge?
mr=mc
mc = 300
mr=
revenue = p*q
(1000-q)*q
1000q - q2
mr (is r’) 1000- 2q
mr=mc -> 1000-2q = 300
q = 350
p = 1000-q
1000-350 = 650
How high is the profit for the monopolist?
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller merelgeense. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.82. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
85443 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now