ECONOMICS CLASS

November 23, 2008 - Instructor: Jezz
Topic:  Exchange Production

Jezz says, Hello, and thank you for joining us tonight. Hopefully I'll be able to shed a little light on the cost of producing commodities for your exchange.

Jezz says. "The first thing to understand is that the exchange is an import/export business.  It produces nothing.  It simply buys and sells and acts as the gateway between haulers and factories on the outside and the planet populace on the inside."

Jezz says, "say Commodities are produced and consumed on your planet.  The populace sells any goods produced in excess of it's needs to the exchange and comes to the exchange to buy the things in which it has a shortfall. So all you are really trading in is excess and shortfall."

Jezz smiles, "if the planet produces exactly what it needs, no more and no less, in a commodity, you cannot make groats from it because none of that commodity will pass through your exchange.  But if there is too much or too little you certainly can :)"

Jezz says, "hopefully there's no questions so far... that was the easy bit"

Jezz looks around the room just in case

Jezz says, "alright.. now that is out of the way..  Obviously with an import export business you have to buy the things you want to sell.  If your planet produces an excess then your exchange will pay the current Value to the planet for each ton it buys."

Jezz says, "If I look at the exchange for both I'll see this.."

Jezz holds up a large card...  Lasers: value 348ig/ton  Spread: 40%   Stock: current 14000/min 100/max 14000  Efficiency: 105%....... Musiks: value 592ig/ton  Spread: 40%   Stock: current -525/min 100/max 200  Efficiency: 100%

Jazir asks, "Intriguing. What is the net production of those two?"

Jezz says, "say Same base price.. but with lasers I have more supply than demand, hence a low value.  Musiks has more demand than supply so the value is high."

Jezz says, "Hi Trill.. take a seat next to Zard and keep him in line please"

Jezz says, "one is a def and one is a prod.. but the same base price"

Dopplershift drawls, "Obviously..."

Jezz says, "the Value of a prod when it's at it's stockpile level is an average of 25% lower than base.  The price wavers between 21% and 29% lower than base but the average is 25% discount off the base price."

Jezz says, "whereas the value of a def is an average of 25% higher than base with the same sort of variance."

Jezz says, "BUT... when you tell your exchange you want more of a prod than you have, the value can go up considerably. How much higher it goes depends purely on how much you have in stock and how much more you want it to buy."

Jezz says, "in effect you're creating a deficit and that puts up the price"

Jezz says, "Spread has no effect on the deals your exchange does with your planet but it matters a lot when you're doing business with factories or haulers."

Jezz asks, "questions?"

Jezz says, "I mean relevent questions.. rather than something like.. how do they keep the flame lit when welding underwater"

Jezz says, "ok I'll continue"

Dopplershift asks, "so you pay more to fill yer defs, or am I missing something here?"

Jezz says, "remember that you are going to pay Value for what you buy from your planet..  If you only have the 200 tons that you start with when you get a new exchange, and you tell the exchange that you need 2000 tons, you'll drive your cost way up because you've told the planet you need 10 times more than you have."

Trilleth asks, "So by going up in smaller increments, you make the cost to raise the stockpile smaller, right?"

Jezz says, "anyway.. back to doppler's question..  yes it cost more but you make more"

Jezz says, "if you have 200 tons and you set the stockpile to 2000  you'll have 10 times demand compared to the supply. Your exchange is desperate to buy to fill"

Jezz says, "so it jacks the price up to above base price and you have to pay that high price for the goods from your treasury."

Dopplershift says, "ahh, 'walking up the exchange'"

Jezz says, "Instead of paying approximately 350 for lasers you'll be paying over 700 per ton until you start to get close to the stockpile level and the exchange stops panicking. So.."

Jezz says, "when you fill a def you are buying in from outside..  that's where the spread comes into play"

Jezz says, "you can actually make a lot more on defs than prods, especially on an agri planet.  But it depends on which commodities are defs and how fast they move"

Jezz says, "On a prod...if you only have a little in stock it's vitally important that you only raise your stockpile level a little at a time when you start your exchange walk up.  Otherwise you're throwing groats down the drain that you'll have to work twice as hard to make back later when you start sell to the goods."

Jezz says, "When I start a walk up I only raise the stockpile level 100 tons at a time and only on a few commods at a time so the treasury doesn't sink too fast.  If I can keep the price of filling the excahnge down I can make it back more easily"

Jezz says, "Hauling in the defs at the same time you walk up will help too because you'll make groats on those"

Jezz says, "Say the good news is that the more you have in stock, the more you can raise the stockpile without throwing your exchange into a panic.  The price rise is less severe after 1500 tons, really levels off after you have about 3000 tons in stock and is definitely undetectable if you have 10,000"

Trilleth says, "So if you're planning on hauling a commodity, even rarely, you should have it set at 10,000 tons?  Hypothetically, of course."

Jezz says, "I would definitely have it over 5000 to keep replenishment costs down..  it might rise a little then but hardly anything"

Zardoz says, "10,000 should be your base."

Jezz says, "I prefer to have 10k all the time but that can take a lot of walking on a slow prod"

Trilleth asks, "Say you're a lazy (or just plain not) hauler and you don't want to get stuck with all that extra product at the end when you're promoting again.  How costly is it to set your slower prods at 5000?"

Zardoz doesn't walk up his slower prods.

Jezz says, "If you only walked up to 2000 and then hauled out a couple of trips.. your replenishment cost could eat all your profit and at lower level the replenishment would cost you more than you'll make"

Trilleth nods.  "Okay.  That's close enough for what I need to know.  Thanks."

Jezz says, "if you walk up slow.. you can keep your walk up costs down."

Meijerman asks, "how long does it take to fully walk up the exchange?"

Trilleth coughs and mutters, "Depends on how dedicated you are."

Zardoz says, "And at the efficiency level of your planet."

Jezz says, "if you have an average commod with a value of 500 and 200 in stock and you put that stockpile level up by 200 tons..  the value will go up about 150 groats"

Jezz says, "yep efficiency and production matter for speed."

Zardoz says, "Meijerman, for an agri planet, it will take a day for your biggest producers, the rest will fall into place over a week or so."

Zardoz says, "That is walking up to 20k."

Meijerman says, "ok that was what i was wondering"

Trilleth tries to figure how long ago she promoted, then hides.

Jezz says, "Start with the most efficient high production commods.. after that you can take your time because you already have something to haul out"

Zardoz agrees with Jezz.

Jezz says, "I walked up my agri planet in two days total.. my resource planet took me a week.  I had a lot more producers and they were slower"

Trilleth ums.  "And not that I'm promoting anyone actually exerting themselves, but if you want to stay in positive numbers, haul your defs in regularly.  Or get someone else to."

Jezz says, "hauling defs in is vital.. particularly on and agri planet"

Jezz asks, "remember that the value of the def was a lot higher than the value of the prod?"

Jezz says, "if you set your spread to 40% on a def you'll pay 20% less than value for the goods from the hauler"

Jezz says, "your planet will buy those goods from the exchange at value"

Jezz says, "20% of a big number is more the 20% of a small number"

Jezz says, "therefore your treasury makes more from hauling a def than shipping a prod.. all other things being equal of course"

Jezz drawls, "Something I want to mention because I've seen it done..."

Jezz says, "never NEVER up and decide to haul in your prods to "get them started""

Jezz says, "Someone was explaining to me how they hauled in 4k tons of a prod after setting the stockpile way high to get the stockpile started"

Jazir has never bothered to do something the workthings will do on their own

Jezz says, "to start with.. they paid for 8k and only got 4k"

Jezz says, "exactly Jazir.. but I thought I would mention it because someone who shall remain nameless was doing it"

Jezz says, "It doesn't matter who it was but it does point to why understanding what you're paying for in your excahnge is important"

Jezz says, "it boils dow to this..  if you have a little stock and you tell the exchange you need a heck of a lot more right now.. it's going to try to get that stock in by raising the buying price out of all perspective to what you could sell the good for"

Jezz says, "Spread matters for all trade with haulers and factories but doesn't have any effect on a walk up.. although I set mine to 40 anyway to discourage dumpers"

Jezz winks, "not that it works.. ;)"

Yosemite asks, "what defines a dumper, someone sell more than 7 bays?"

Meijerman says, "so for prods bring the stockpiles up slowly to keep the costs down"

Jezz says, "yes.. and the less you have the less you raise it"

Zardoz says, "More than 7 bays is definitely a dumper."

Yosemite asks, "why not just lower your max stockpile on a def to 200, that keeps dumping down as well?"

Jezz says, "yes but then I wouldn't be walking anything up"

Zardoz says, " Yosemite, she was talking about during the walkup of a producer."

Jezz says, "I always have defs max at 200"

Yosemite asks, "well if you only raise your max by 100 on a producer, doesn't that negate dumping as well?"

Jezz says, "once you have 1500 tons you can raise your stockpile on a prod by 200 or 300 without driving the price through the roof.  After 4000 tons I start raising by 500 tons at a time"

Jezz smiles, "Now if you have absolutely no patience feel free to set that stockpile up high right off the bat.. but then don't complain that your treasury fell through the floor :)"

Jezz says, "If you keep your prod costs down you will make the cash back when you haul out..  if you are too impatient you could actually lose money on the deal"

Jezz says, "if there are no more questions on production costs.. feel free to ask completely non-related ones such as welding underwater"

Jezz says, "I just won't guarantee a right answer on those"

Yosemite asks, "when you haul out from your stockpile, at what percentage of draw down will you begin to see a significant increase in the value?"

Meijerman asks, "at what point do you start hauling out of prods is it when it reaches the stockpile?"

Jezz says, "after you get below that 3k - 4k in stock mark you'll see a difference... less than 1500tons in stock it gets huge"

Dopplershift asks, "okay jezz, how do you apply the ground for underwater welding in sea water???"

Meijerman says, "i know that one dopp  very carefully."

Jezz says, "I start hauling out once I've reached the amount I want to keep in stock.  For my resource exchange I walked up to 14k then started hauling out"

Dopplershift drawls, "No, meijer, that was a trick question, you don't arc'weld underwater...."

Jezz says, "Doppler.. I'd say Meij is right on that one.  Cats.. therapy"

Yosemite says, "if you have a producer say with a net of 49, and you raise the maz by 100"

Yosemite asks, "when it gets to 98 and you only need 2 more to reach the max, do you only pay for 2 or do you pay for the full 49 but only get the 2?"

Jezz says, "you pay for just the two"

Jezz says, "the exchange actually prorates the price to the amount you actually bought"

Dopplershift drawls, "I would SO like to see Alans's code......"

Jezz says, "also when you are looking at value you'll pay the value price right before the goods went into your exchange"

Jezz smiles, "well I hope someone learned a little something from all that :)"

Jazir smiles, "I did, a very good job. Thank you :)"

Trilleth asks, "Thank you so much, Jezz.  Can you find an exchange rate for 5 and 6 yo boys?"

Dopplershift says, "good job, Jezz"

Jezz shakes zardoz to wake him up

Meijerman says, "sorry trill no deposit no return policy"

Catspaws drawls, "Great job, Jezz..."

Catspaws pretends she heard the entire lesson

Jezz winks, "sorry you missed the lovely math portion Cats, where I went into the percentages. ;)"

Jezz says, "hard to make percentages thrilling"

Meijerman says, "couldn't find the percentage key on my abacus"

Dopplershift drawls, "its 3 beads to the left and two up, Meijer...."

Jezz says, "well it's way past my bed time.. have fun folks and thanks for coming"

Meijerman says, "thanks Jezz"

Jazir smiles, "Night Jezz, a great class :)"

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