Friday, 26 October 2012

The Underproduction of The iPhone5



iPhone5, the latest smartphone introduced by Apple has run out of stock just a few weeks after the launching of the product which we usually attribute to  underproduction. Many of the companies have been facing this problem due to the demand of the customers being not stable and unpredictable. Underproduction is a situation where the supply that is produced is lesser than the amount demanded by the customers. And in the article, it is written that due to the demand of the iPhone5 are incredibly high where the initial supply has been sold out just in a week. 2 millions of online pre-order and 5 millions units sold out on the third day when it launched. They afraid that they need a longer time for the next shipping which is estimates on week three or week four. 

As we can see the chart above describes the demand is increasing and where the supply is not increasing. The D1 represents the demand before it increases, and the S1 shows the supply and the D2 represents the new demand that have increased due to some factors. The E1 is the new equilibrium after the increasing of demand and when the demand is increase but the supply still don’t move it will causes the underproduction which makes the line shift from the D1 to D2 and meet at a E1 point as shown on the chart. If the price is below the equilibrium it will cause the shortage and if the price is higher than equilibrium it will be a surplus.
The demand of the iPhone5 is apparently very high because a particular reason which I read on an article somewhere on internet. The customers have been hold up their purchasing on the iPhone so long as they heard the issues that iPhone5 will be released soon. Of course everyone wants to be the one who is the most up to date so when iPhone5 is officially launched, all of them will go for it so the demand that should be this amount increased to that high amount. On the other hand, Apple Inc. who thought that the demand would not be this high, they proceed on with the amount as they have planned. As the result now, Apple Inc. is keep on chasing on producing the iPhone5 to the level that they can control the quantity of the demand. As you know, producing one unit of iPhone5 took a few months, and Apple Inc. has a high requirement on the fact of their quality, like the screen and the chip all must be assured in good quality which is same between one iPhone and another iPhone, so they would do the best on producing even the demand is only one iPhone.
If the quantity demand cannot be fulfilled, some of the customers will find the second best alternative (opportunity cost) to deal with it, for example : buying Samsung’s latest product, Samsung Galaxy S3  which is also Apple’s strongest competitor that have a par or even better market value. Maybe some of the elders will change their purchasing on iPhone into Samsung but most of the youngster who are the biggest buyer will not change their purchase, so Apple won’t facing something like overproduction where no one wants to buy the product.
But Jaffray and Munster, the analysts must have to lowering their forecast on the sales of iPhone5 for September which before is at 27,2 million units to 25 million units. The supply constraints for the iPhone 5, lower computer shipments overall, and the high percentage of new iPhone purchasers who are not new to the platform all led analysts to expect reduced performance from the Cupertino company.
In the fact Apple Inc. also try their best on matching with the equilibrium point on next December with 49 millions units of production so the sales on iPhone5 will be at stable position and of course hopefully everyone can enjoy the new iPhone5 with the price that reasonable. And Apple Inc. would take up a lot of work remember that there are still 170 millions post paid subscribers coming off contract. I think the economy level on the Apple Inc. is pretty good because the demand is still higher than the production that have been made.
The price for the Iphone5 currently if we buy from local operator at Singapore for 16 gigabyte is US$199, 32 gigabyte will be US$299, and 64 gigabyte is US$399 with two years contract signed. On the other hand without contract signed will be S$948 (US$772) for the 16GB model, S$1,088 (US$886) for the 32GB model and S$1,238 (US$1,008) for the 64GB model.
The elasticity of the iPhone5 is perfectly elastic because the price will be the same no matter how many of the quantity have been sold.  On the other hand, the demand is elastic because there is still have another substitutes besides the iPhone5 like Samsung, HTC, and many more.
Actually the iPhone5 has changed the maps from Google Maps to maps that created by Apple Inc. itself which has a lower quality rather than the Google Maps. Maybe now still lack of many things like the new software offers fewer details on it, the public transit still not as complete as Google maps, and there are many misplaced landmarks on it. But in the fact, customers doesn’t really put it as a serious matter, what they think is Apple is pretty good enough on trying because they want to make everything originally from Apple Inc. I said they would see this as short-term pain for longer-term gain.


http://www.businessweek.com/ap/2012-10-02/analyst-iphone-5-demand-unfazed-by-map-concerns
Posted by Unknown at 12:33 0 comments

Scarcity of Diesel in Batam


  “Solar” is what we call it in Indonesian and if it was translate for to English “Diesel” scarcity, has been Batam’s most concerning problem now. Maybe most of you don’t know Batam, it is an island, part of Indonesia, just beside Singapore, and called as an Industrial Island, which is also my beloved hometown. Actually this problem has been happening since a few months ago before I came to Malaysia to study. I am a licensed driver too and I drove a car that fuels up with diesel. So I can clearly tell you that Batam’s diesel stock is very difficult to find. I think it is enough for me to be called as a lucky person whenever I find a diesel stock in a petrol station. Until now, the scarcity of diesel has not solved by the government yet. The demand of diesel in the city is extremely high until each of the drivers who use diesel needs to queue for hours to get fuel. This problem has been getting worse and worsen by the day. In Indonesia Pertamina is the only one keep supplying on the fuel or gas, owned by the government. (about Pertamina)
This problem has the same situation, which the law of supply stated that, where if the price is low, then the quantity demanded will increase. And when price is high, quantity demanded will be decreasing. And the demand is elastic because there is another substitute such as the public transportation and the Pertamax (high quality fuel).
 In this article, the diesel supply’s price is already at the subsidized price. That’s why many people go for the cheaper one instead of buying Pertamax because government never controls who is allowed to use the subsidized diesel, and who must use the Pertamax. Yes, government did something to prevents the scarcity like limit the usage of each four-wheeled only can refuel till 200,000 rupiah (RM64) at once but it doesn’t work so efficiently because most of the kind of transport that refuel using Solar are those big trucks and big car. The solution that government provided are not efficiently useful because 200.000 rupiah's fuel only can refuel half of the fuel box. As for me, I will go to another petrol station to refuel for the diesel again at the same day because the stock of the Solar are uncertain so whenever there are stock left, I would fuel it to the max.
For the student drivers like me of course the prices on Pertamax are really expensive for us because the price is two times of the subsidies diesel or petrol. So when the fuel is rare like right now, I would prefer to take the public transport because actually Batam is not really a big, we can using public transport like mini bus to go to one mall and then move to the other mall by only paying 2000 rupiah for student and 3000 for traveler. It’s not an expensive price to spend actually and it is reachable by the students. Then if the destination is not too far, I prefer to walk and I take it as my opportunity cost and my marginal benefits will be making me healthier. But the problem is most of the people at Batam prefer to buy car than taking the public transport because it is more convenient to use car than the public transport and the price of the transportation at Batam is not so expensive. The public transport at Batam didn’t cover all areas, so it would be harder for someone who lived a little far if they take public transport.
If the government still cannot clear the problems of scarcity, at least they should do the best to re-organize the public transport as the alternatives for customers by re-building all the facilities and make it looks more attractive; of course people would use the public transport. Besides that the government should increase the tax those who drive a car with price above 150 millions rupiah so people would buy lesser car.
About the supply, yes it was written on the article that the supply has been fixed due to each area’s agreement so we cannot do anything. But I don’t think the amount that they agreed for our area is a not enough, based on my opinion, our supply actually is more than what we need. For my opinions, there are two things need to be correction.
The first one is the government should prohibit those who drive trucks to refuel at the petrol station because most of those trucks are coming from industries. Just for you know that the government cost the fuel to the industries are twice higher than the usual price because it was not subsidized. That’s why those trucks coming down and refuel at the petrol station because it is cheaper.
For the second one, the civil staff is also a big part of this problem where they use their position in the wrong direction. They do an illegal business with the “industrial island” which is helping mafia on selling the diesel to the shipyard and those industries in order to get a higher profit. As you know the price of the diesel for industry and in the petrol stations have an extremely different. These mafia sell the subsidized diesel to the industries and shipyard which are supposed to be the stock on the petrol station. As I said before, the mafia can make much more money because actually the shipyard and industries they are required to pay the twice price for the fuel they used. That’s why the amount on the petrol station decreasing and not enough for the citizen. So it would be great if this problem is cleared too.
Actually the government itself did try to caught those who did illegal things but they never repent even they were caught. Moreover, even they were caught, they can get out from the jail easily by bribing the judge.
The scarcity of diesel may cause discomfort for a lot of the drivers too. Some of them have been scolded by their boss by their for being late to work because they need to queue for solar. And many of the petrol stations put the display about out-of supply. And some of them cannot work because there is not enough petrol to take them for providing the service.
The civil staff of Indonesia should be contributing something for the country. Actually they are not lack of patriotism, they are behaving like this because too greedy for the money. Actually this is the main cause why investors afraid to invest their asset at us, too many corruption won’t result any profit for them, even more there is a chance of suffer a loss from it, I think Indonesia needs a better leader who can lead them to a better economic level where can compete with another country. Only by that we can make the world think that Indonesia is not just a simple country but a country full with talented people.
video link : 
http://batamtvnews.com/berita/8126/video-bbm-langka-hanya-1-spbu-yang-tersisa.html
main article : 
Posted by Unknown at 12:29 0 comments
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