Economics includes various jargon and out of these, supply and stock are two popular ones. While these may sound similar, they hold completely different meanings.
Understanding the difference between stock and supply is key to resource management and competitive market strategies. Stock simply refers to the total quantity produced while supply is the amount the producer is ready to offer in the market.
Stock and supply are different faces of the same coin! Both these terms are related to the production and sale of a commodity. There are various points where supply and stock differ and here, we will explore the same.
What is a Stock?
Simply put, stocks refer to the total quantity of a commodity available to the producer in a given period. At any given period, the stock is calculated in the following way:
Total Stocks Produced – Stocks Supplied In The Market
Out of the total stock produced, the producer supplies a part of it in the market. The quantity left with the producer is the current stock available. The producer focuses on rolling out the maximum quantity to maximise the revenue.
You must note that a producer usually does not supply a complete quantity of a commodity in the market. A part of it is hoarded or stored in the warehouse.
When favourable prices soar in the commodity market, the remaining stocks are supplied. However, to store a part of the stock, the producer must have a good warehouse storage capacity to avoid product deterioration.
What is Supply?
Supply refers to the total quantity of a commodity that the producer is willing to supply in the market at a given market price. As discussed above, only a part of the stock is supplied in the market and a part is stored in the warehouse for future supply.
So, the supply does not refer to the total quantity produced. It is only the quantity that is made available in the market by the producer. As per the demands in the market, the producer rolls out the quantity of a commodity which is termed as the supply.
Supply is majorly affected by the price and demand in the market. To maximise profit, the producer must pay heed to stringent marketing strategies and the favourable price range of the product. Marketing and promotions can help increase demand and thus, maximise sales potential.
Did you know the term “stock function” refers to the relationship between total supply and determinants of supply?
Distinguishing Between Stock And Supply
Now that you know what stock and supply distinguish between are, let’s distinguish between stock and supply. The table given below explains the major differences between the two:
| Stocks | Supply |
| Stocks is the total quantity of procured goods available with the producer at a given point in time | Supply refers to the amount of produced goods that the producer is willing to supply and open demat account in the market for sale at a specific price rate and a particular point in time |
| Stocks are not measured with reference to days, weeks, or years, i.e., specific time | Supply, however, is measured with reference to time that includes daily basis, weekly, or in a year |
| Stock is an independent segment. It is not dependent on the supply requirements. In simple terms, stocks may be more than the supply | Supply is directly dependent on the stocks available. The demand for supply of a product can only be met if the required stock is available. So, supply can never be more than the stock available |
| Stocks of a product/commodity is decided on the basis of its production capacity | Supply is usually dependent on the market price rate and also the demand for the product |
| Stocks fulfill the purpose of supply. In case of an increase in supply requirements, stocks are helpful | The purpose of supply is to sell required quantity of goods to generate revenue |
Conclusion
Producers usually tend to push the maximum produced stock in order to maximise the revenue. It also helps maintain the flow of new production.
As a producer, it is crucial to evaluate their stocks and supply to get a hold of the market and maximise the profit.
Managing stock and supply is crucial to avoid wastage of stocks and overflow of the goods in the market. Along with this, impactful marketing strategies are needed to make space for the demand for your product in the market!
