# Why pour milk into the sea?

Source: Internet
Author: User
Tom is a dairy farmer living in the outskirts of the city of miguo wuyoucheng. Somehow, there are hundreds of miles around, only this dairy farm. Tom's dairy farm has 2000 cows, producing 2000 tons of milk each month. The milk is supplied to citizens of Wucheng and farmers nearby. The price of milk is USD 500 per ton, and the production cost of milk per ton is USD 300. Therefore, Tom can earn \$0.4 million a month.

Jerry, the son of an MBA at the university, is investigating the local milk market. This is a winter vacation assignment assigned by the teacher and is intended to consolidate and apply the Supply and Demand theories learned in the classroom.

After a month of investigation, Jerry pointed out to his father an astonishing discovery: "You have lost an average of \$1.3 million per month over the years ."

These words make Tom very unhappy: "alarmist ."

"I have already verified the situation. Let me explain it to you ."

"Listen ."

"Our monthly milk is sold to 1000 tons of urban residents and 1000 tons of rural farmers. The average income of urban residents in wuyou is more than twice that of rural farmers. For these citizens, milk has become a daily necessities, and the money they spend on milk accounts for a small proportion of their total living expenses."

"I know ."

"My market research shows that even if the price of milk is quadrupled, the price is USD 2000 per ton, and the demand of urban residents for milk will not decline ."

Tom understands the income and living standards of uyoucheng residents. based on years of experience and intuition, he feels that his son's findings are likely to be true. However, he immediately discovered another situation: "the farmers in the countryside are very poor. According to my experience, 500 USD per ton, that is, 25 cents per kilogram, is the upper limit they can afford, if the price is exceeded, they will not buy milk. Our monthly milk production is 2000 tons, and the city can only sell 1000 tons. To sell all the milk, we can only sell 500 US dollars a ton. In this way, I can earn \$0.4 million a month ."

"If we could sell 2000 million US dollars to people in the city, it would be nice for the country staff to sell 500 billion US dollars ."

"This is impossible. Folks will sell our milk to the city, and \$2000 is not enough ."
"Why not only do you sell it to city residents? USD 2000 per ton. We will not supply it to any folks. You can think about it. If you sell 500 US dollars per ton and 2000 million tons, you earn 0.4 million US dollars a month. If you sell 2000 US dollars per ton, you can only sell 1000 million tons, however, it costs \$1.7 million a month. "

"But we have already produced 2000 tons this month. If we want to sell 2000 US dollars a ton, isn't the extra 1000 million RMB worth it ?"

"Yes, it's a pity to drop it. But if we drop them, we can still make \$1.4 million. If we don't drop them, we can only make \$0.4 million. After all, making money is our goal. And you only need to drop it. Otherwise, no one will believe that you will really sell 2000 US dollars a ton ."

Old Tom knows that Jerry's analysis is correct. He made up his mind over and over again; he dumped 1000 tons of milk.

Maybe this decision has a big impact on him, and his mind is a little too difficult, after all, I said what I thought was ridiculous: "What should I do later?" Do I Need To generate 2000 tons of data each month and put down 1000 tons of data?"

Jerry laughed: "Why? The dumped milk will only be used this time, and we will not need to produce that much in the future. Therefore, after we dumped the excess 1000 tons this month, we will slaughter 1000 cows and quit some workers, rental of excess farms and cattle farms can reduce the monthly production cost to \$0.3 million, and the sales revenue is \$2 million. The monthly net profit is \$1.7 million. "

The next day, Tom's Dairy Farm was dumb: he poured 1000 tons of fragrant milk into the sea, slaughtered 1000 cows, and quadrupled the milk. Naturally, Tom suffered a lot of scolds. However, in addition to scolding, people are helpless. For the poor, the only way is to stop drinking milk. City residents still buy Tom's milk, even though he is not satisfied with the sharp price increase, but he cannot.

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