Difference between Stock and Supply

Stock

Stock is the total quantity of goods available to the producers at a given period of time. It comprises both the number of goods supplied for the purpose of selling as well as the quantity of a commodity that is stored, withdrawn or hoarded from the market for selling in the future. The stock of a commodity is defined as the total quantity of that commodity produced during a particular period minus the quantity of the commodity sold. However, all the stock produced is not offered for sale in the market. A part of it gets stored in the warehouses and is only released when prices are favourable. A company must focus on making sure that they are able to roll out most of their stock in the market for sale. They should also maintain proper warehousing facilities to keep the current stock in proper condition.

Supply

Supply is defined as the quantities of a commodity that a seller wants to and is able to sell at the prevailing market prices over a specific period of time. Supply does not mean the total stock of a commodity. It only includes a portion of goods that is brought to the market by its producers for selling and distribution. The supply of goods also indicates a relationship between its quantity and price. There are three main aspects of supply:

willingness and ability of the supplier to bring the goods to the market, the range of the price & quantity of the goods to be supplied and the time period for supply. It is common knowledge that supply is affected by the prevailing market price of a particular good. It is important to keep the price at a level that will allow manufacturers to maximise the sale potential of their products and generate optimal revenue. They must also look to intensify their marketing and promotional efforts to ensure greater sales.

Difference between Stock and Supply

A company needs to ensure that most, if not all, of its stock is pushed in the market for selling to generate enough revenue. With the help of this revenue, they will be able to take care of production as well. If there is a huge amount of unsold stock in the store, the management needs to devise new ways to dispose of it before it loses its value. Now that we have understood the basic concept for both stock and supply, it is important to evaluate the distinction between the two. The main points of difference between stock and supply are as follows:

Stock

Supply

Definition

Stock refers to the number of goods that is available to the producers at a particular point in time.

Supply is defined as the actual quantity of the goods that a seller is willing and able to sell to consumers at a given price and at a particular point in time.

Time Dimension

In terms of the time dimension, the stock is not measured with reference to time, i.e. on a per year, month, week, or daily basis.

In terms of the time dimension, the supply is measured with reference to time, i.e. on a per year, month, week, or daily basis.

Measurement

The stock for any commodity is measured at a specific point of time.

The supply for any commodity is measured over a particular period of time.

Interdependence

The stock for a commodity is not dependent on its supply. It can be more or less than the overall supply of goods.

The supply for a commodity is dependent on its stock. It will always be less than the overall stock of goods.

Dependent Factors

The stock of a commodity depends on factors like production.

The supply of a commodity depends on factors like price.

Nature

The stock of a product is calcluated at a specific point in time, and as such, it is static in nature. It provides data on the total quantity of a commodity available at a particular date.

The supply of a product is measured over a period of time. It keeps on fluctuating within that time period and is thus dynamic in nature.

Purpose

The main purpose of stock is to fulfil any unexpected increase in demand for the product.

The main purpose of supplying goods by any company is to sell them to generate revenue.

Scope

The stock has a wider scope since it includes both goods that will be up for sale and goods that are sitting in the warehouse.

Supply has a narrower scope since it includes only those goods that will be up for sale.

Factors Affecting Fluctuation

One of the main factors affecting stock is production. If there is a change in the number of goods produced, it will affect the stock of that commodity.

One of the main factors affecting supply is the stock. If there is an increase or decrease in the overall stock, it will affect the supply of that commodity.

Conclusion

Although there are major points of difference between stock and supply, they play a crucial role in making sure that the firm is able to fulfil its orders. The dependence of the supply of a commodity on the company stock makes it all the more important that they replenish it at regular intervals.

Frequently Asked Questions

What are the main determinants of supply?

The main determinants of supply are as follows:

  • Price of a commodity
  • Technology
  • Price of related goods
  • Price of inputs
  • Transport and communication
  • Number of sellers
  • Natural factors
  • Taxes
  • The future expectation of price rise

What is the meaning of the supply function?

The relationship that exists between the total quantity of a good supplied and the determinants of supply is known as the supply function.

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