I agree with your logic, but not sure that they actually will do it. If they expect the next disaster in 10 years from now, when keeping larger stockpiles is expensive and useless. Also, they could earn more by selling less, if prices jump.
Keeping a larger stockpile seems like a one-time fixed cost, if you own the warehouse you’re operating? You need more shelf space, and you need to increase your inventory as a one-time payment. But after that, the inflows and outflows should be the same as before. And every year you have a chance of making bank in the event of panic buying.
The ideal outcome might be panic buying which leads to nothing but a bunch of warehouse owners saying “Darn it, we ran out of X right before the price went way high! Let’s keep more on reserve going forward in case that happens again in the future.”
I don’t think you can fully treat it as a one time cost. You also need to consider it something of a capitalized cost so the direct out of pocket is likely understating the economic cost.
I agree with your logic, but not sure that they actually will do it. If they expect the next disaster in 10 years from now, when keeping larger stockpiles is expensive and useless. Also, they could earn more by selling less, if prices jump.
Keeping a larger stockpile seems like a one-time fixed cost, if you own the warehouse you’re operating? You need more shelf space, and you need to increase your inventory as a one-time payment. But after that, the inflows and outflows should be the same as before. And every year you have a chance of making bank in the event of panic buying.
The ideal outcome might be panic buying which leads to nothing but a bunch of warehouse owners saying “Darn it, we ran out of X right before the price went way high! Let’s keep more on reserve going forward in case that happens again in the future.”
I don’t think you can fully treat it as a one time cost. You also need to consider it something of a capitalized cost so the direct out of pocket is likely understating the economic cost.