Warehouse

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Warehouse

Postby Dan Bonnell on Sun Dec 20, 2009 6:19 am

New to the game... I have a warehouse. All of my products are making profit other than my wine. Wine is losing $15k per month. I have a supply contract where I am supplying 50 bottles per month at $1,806. Any idea why I am losing so much money on this product?
Dan Bonnell
 
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Re: Warehouse

Postby Michael Frederick on Sun Dec 20, 2009 11:52 am

Hello there. Brand new here as well.

Are you making the 50 units a month in a factory? Probably not, because if you don't...what you don't make gets bought at market price to fill your contract and you eat the loss.
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Re: Warehouse

Postby Kit on Sun Dec 20, 2009 6:25 pm

Dan Bonnell wrote:New to the game... I have a warehouse. All of my products are making profit other than my wine. Wine is losing $15k per month. I have a supply contract where I am supplying 50 bottles per month at $1,806. Any idea why I am losing so much money on this product?


Hi Dan, Welcome to the game.

The reason that warehouse supply unit is losing so much money is that it is selling the wine at a loss. The base value of wine is $2,100 per unit. Your supply contracts are written for $1800 and $1900 per unit. Perhaps because they were written when the market price for wine was much lower or the economy was in a panic or recession.

Your factories will sell to your warehouses at the base price for each good, for wine this is $2100/unit. So when your supply contract is for $1900 per unit you will lose $200 on each unit you ship. Sometimes this is a good deal if your factories are making more than $200/unit selling to your warehouse, but in this case it looks to just be a loser for you.

The only thing to do is to let these supply contracts run their course and not renew them. When committing to supply contracts you need to make sure they are a good deal for you. These appear to have been a better deal for the other party.

In general you can make good to modest profits writing a supply contract for the base value of a good. It's very tough to make money at less than the base value, but sometimes possible during a recession or panic.

Hope this info helps, good luck, and enjoy the game.

-- Kit
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Re: Warehouse

Postby Zerico on Tue Jan 19, 2010 12:24 am

Can I adjust those buy sell prices?

For example, right now I'm making wine at my factory and selling wine in the store. I created an independent spreadsheet that caculated my cost per item including overhead for the production lines. I know that I'm making several hundred dollars per bottle sold. However, my warehouses say they're hemoraging money.

Can I change those automatic internal buy/sell pricing? I know i'm making all the same money, it just that my balance sheet doesn't look quite the same.

And in the real world, owning a property that is constatly losing tons of cash would not look good to the bank if I'm going there for a loan even though it's balanced by greater profitability in another section.
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