Business Theory Essay Example | Topics and Well Written Essays - 2000 words

Business Theory - Essay Example As the IS curve shifts to the right the goods market will clear on a new equilibrium level E2 increasing the interest rates and the level of income. As the IS-LM model is based on the assumption of continuous market clearance in the assets markets the adjustment path is along the LM curve, as depicted in the figure below. Through the increase in the government expenditure the private investment spending falls since the interest rates get higher changing the formation of output with the increased share of larger public sector. The decrease in investment spending with an increment in the government expenditure is regarded as the notion of crowding out. With more crowding out the fiscal policy becomes more ineffective. This can be understood as, the more interest rates rise in response to the increase in government spending the more crowding out will occur and the less effective fiscal policy will be in expanding the economy. This can be graphically understood as the steeper the LM curve the greater the crowding out effect. As we know that the slope of LM curve shows the interest elasticity of the demand for money. A steeper LM curve shows that the increase or decrease in the rate of interest does not effect the demand for the real balances. For instance, the less responsive the demand for real balances to changes in interest rates the steeper the LM curve. This leads to a conclusion that in case of significant crowding out the demand for money is not affected by increase or decrease in interest rates. In this particular situation the Government can increase spending by financing it through lower the price of its bonds and hence raising the interest rate. The slope of the IS curve also depicts the effects of expansionary fiscal policy. The effects of expansionary fiscal policy also depends on the size of the shift in the IS curve arising from the government spending increase. Complete Crowding Out A vertical LM curve depicts the complete crowding out. When the LM curve is completely vertical it means that

Supply Chain Management Essay Example | Topics and Well Written Essays - 1000 words

Supply Chain Management - Essay Example Consumers always desired to get newer stocks and also other modified and sophisticated inventories which they considered would help meet the value of their expenses. Further the consumers also are found to order for getting the repeat stocks owing to the quality advantage obtained from such. However the present practice followed by the company in regards to stocking of the inventory created a problem for the consumers for they failed to get the right stock ordered for and also failed to regain the reorders made. The huge pile of unwanted and unsold inventories added to the problem for which the right and effective stock failed to be procured rightly and stocked for being delivered to the consumers. This problem of overstocking also led the company encounter huge losses and also blocked a large part of the working capital. This capital thus blocked could have been used by the company in other productive purposes. Thus the company not only suffers from lack of proper revenues emanating from the sales of inventories but also large numbers of complaints lodged in by the different customers for not getting the proper stocks required for. This fact in turn is found to hamper the goodwill of the firm and led the company counter a failure in the competitive business market. Moreover the presence of large number of unused and unsold stocks in the warehouse makes matters worse for specifically identifying those stocks which lead to the menace. Thus having large stocks spread around 30,000 stock keeping units create large number of problems for the warehouse manager to rightly identify and reduce the number of such odd stocks. Hence the management of Champion Electric thinks it feasible enough to reduce the inventory level so as to help in the effective management of the right and productive stock for the business concern to sale and gain considerable profit. Thus the management of the concern was found to be concerned in management of the stock levels of the firm in a sm art manner so as to help enhance the productivity climate of the organization. Hence this effective management of the stock level would help the company in firstly assessing the productive stock level and secondly in meeting the needs of the consumers in an effective manner. It would thereby save the concern in times of emergency when it required procuring products from external markets with additional amounts so as to meet customer requirements (Case, 232). A.2. President Campos of Champion Electric also was found concerned regarding the piling up of the stock levels in the warehouse leading to locking of considerable amount of financial investments rendered for such purpose. These unused levels of stocks in the concern not only made the management feel wary but also led to rise in the event of consumer dissatisfaction. Thus the president desired the effective management of such stock levels which would help the concern to enhance the level of service it required to deliver to the consumers by catering to their demands effectively (Case, 232). Thus Barb Patterson in order to abide by the order of the president was required to fulfill certain salient steps. Firstly Barb is required to identify such stocks which have been piled up in the warehouse for six months through the use of stock codes or labels in the computer. Secondly Barb is require