Production and Operations Management Essay Example | Topics and Well Written Essays - 1000 words

Production and Operations Management - Essay Example2. Analyze the consanguinity between the retail set of gasoline and the world demand for crude rock fossil crude cover. To understand the relationship between the price of gasoline and the demand for crude oil , well first need to understand the dynamics of both gasoline and crude oil individually. Like many commodities macrocosm traded in the global market manage gold, silver, rice, wheat etc. crude oil is also traded. The main reason for it being traded in the global market is that its one of those commodities which is unevenly distributed on the surface of earth. It can found in much abundance in one place which cease to exist at some other country. This dissymmetry in the geographic distribution of crude oil makes it quite an important resource to be present in any country. The countries with its abundant deposits argon on the top of the food chain economically and the countries with lesser deposits of it are quite weak economically. Hence proving the significance of crude oil for economies. Now crude oil is not only usaged for turnout of Gasoline but many other petroleum products are extracted from it. From this we can extract that crude oil has to a greater extent demand as a commodity and is not only required for the production of gasoline. Gasoline is a refined form of crude oil. cutting oil is extracted or purchased in raw form and goes through various refining processes to produce gasoline. Gasoline has become as the basic commodity which has been in use for decades now as the primary fuel for powering transportation. The transportation requirements move over been increasing each year as the population of the world increases by a portentous percentage each year. Hence increasing the amount of fuel being consumed each year and the demand for gasoline. Now gasoline and crude oil have developed a relationship in which the demand for both are increasing but Gasoline is dependent on crude oi l for its production hence making it the dependent product. The global demand for both gasoline and crude oil is on the rise and with no new large deposits being excavated the supply is not increasing much and the demand is growing making the prices for both oil and gasoline head upward. The gasoline we purchase majorly includes the cost of Crude oil , the refining , marketing and distribution and the taxes. So from this we can infer that there is a inversely relationship between the supply of crude oil and the price of gasoline. Also in the years we have seen where the oil prices have dropped but gasoline prices have risen which is due to the fact that there are disruptions in the supply of oil due to unrest in the middle east. (Fuel, 2011) We also can observe this for a fact that the prices of gasoline rise because with the rise of crude oil price but they dont fall at the same rate when price of crude oil falls. The enumerate behind this fact is that when prices are high , the retailer have to increase it so that they cover up for their profit margins but what makes the retailers bring price pot when the price for crude oil falls is competition. In competition the retailers bring down a few cents to draw in more customers and so on the process continues until they reach a point where they reach their original profit margins or the price of crude oil again increases. Also the demand unstableness of gasoline across various seasons also has an effect on retail pricing of gasoline. (US Energy Information Administration, 2003) 3. Explain what Marathon could do to keep the price at the pump the same without losing