Tuesday, October 28, 2014

Supply and Demand: Ebola Protective Gear edition.

The tragedy of Ebola has created issues in the supply chain for the protective gear we have come to know so well from watching the news.

This article from Bloomberg has two components to it that provide an opportunity to look at this situation from a basic supply and demand perspective. The portions in bold and underlined are my emphasis as this is what I would like to analyze in the graphs below:

The International Association of Fire Fighters said some local fire units are being forced to wait until next year to get the personal-protective gear that shields workers from being exposed to bodily fluids, the only way to contract Ebola. Dupont Co. and Medline Industries Inc., makers of the products, say demand has surged as health departments and hospitals respond to the threat. 
“The administration should put pressure on manufacturers to increase production to meet the growing demand,” Harold Schaitberger, president of the 300,000-member union, said in a letter to Obama. The group met in recent days with officials about the response to the deadly virus, and said supplemental funding from the federal government is needed to help local governments pay for the gear and training.
 This sudden increase in demand has ramifications for both the buyers and producers of this highly specialized protective gear.

In these graphs I created I want to illustrate both of the highlighted points---how the increase in demand affects producers and ultimately the price for the gear, and how the request for government funding might impact the market as well.







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