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

Production and Operations Management - Essay Example2. Analyze the human relationship mingled with the retail determine of gaseous state and the world demand for crude inunct. To understand the relationship between the price of gasoline and the demand for crude embrocate , well first need to understand the dynamics of both(prenominal) gasoline and crude embrocate individually. Like many commodities being traded in the global commercialize like gold, silver, rice, chaff 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 croupe found in much teemingness in one place which cease to exist at some other country. This instability 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 be on the top of the food chain economically and the countries with le sser deposits of it are quite weak economically. Hence proving the significance of crude oil for economies. directly crude oil is non single used for production of Gasoline but many other petroleum products are extracted from it. From this we can extract that crude oil has more demand as a commodity and is not only required for the production of gasoline. Gasoline is a refined form of crude oil. Crude oil is extracted or purchased in raw form and goes through various refining bear ones 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 pack been increasing each year as the population of the world increases by a significant dower 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 depe ndent on crude oil for its production whence making it the dependent product. The global demand for both gasoline and crude oil is on the hiking 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 accordingly with the rise of crude oil price but they go intot fall at the same rate when price of crude oil falls. The matter fag end this fact is tha t when prices are high , the retailer have to increase it so that they cover up for their win margins but what makes the retailers bring price down when the price for crude oil falls is contestation. 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 imbalance 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