Answer to Question #295541 in Economics for Jems

Question

What are these mismatched trends telling us about how demand and supply in the market

Answer 1

A supply and demand mismatch, or imbalance of the amount of supplies with their need in the market, is always an issue and can happen along any sequence of any supply chain.

All types of supply-demand mismatches result in volatility increases. Over a two-year period around the announcement date, we observe average volatility increases of about 21% for production disruptions, 29% for excess inventory, and 26% for product introduction delays.