Monday, April 23, 2018

Manufactured Goods (trade)

Goods that are manufactured have their prices based upon the value of the original raw material plus labour. It is less important how much of a particular product exists (chasing the supply and demand model) that it is to ascertain how much more valuable the product is to the worker after labour has been added.

The synthesis of labour and raw material cost is achieved through a formula - which we will, as with undeveloped goods, use excel to calculate. There are two processes in which this formula applies, which I shall call one-for-one and extraction. In all cases, I will continue to use Marzabol numbers, though of course the same process applies for whatever market we're calculating for.

One-for-One Process

This describes a situation where end result from processing equals the amount of goods produced. For example, it may be remembered from describing the quantity of goods that I wrote that the weight of 'ore' described the metal content only - waste rock is not counted (there are ways of calculating how much of this there would be, for mining purposes, but that is not important to our purposes right now; I will address this later).

This means that we can say, approximately, that one pound of unprocessed ore will, once labour is added, produce one pound of processed ore. Similarly, since the amount of clay that is made into pottery isn't lost in the process, we can say one pound of pottery equals one pound of clay plus labour. This isn't strictly true, of course - there is always waste. It isn't worth our accounting for it, however, so we can discount the waste as not being counted either before or after processing.

Extraction Process

This describes a situation where the amount of material manufactured differs from the original source. There is a great variance to how this can manifest. For example, how many sheep does it take to produce a ton of wool? How much meat exists in a cow or a sheep? How much grain does it take to produce a gallon of beer? How many grapes does it take to make a bottle of wine?

In each case, we need to determine the total cost of all unprocessed material necessary before we can determine its final price. For example, it takes 2.6 oz. of grapes (+.47 oz. of sugar) to make 1 fluid ounce of wine (the internet can provide all sorts of detail on this, with varying amounts for different wines). We don't have sugar in our system, so we're not going to overlook it for now, but if we did add sugar we would want to account for all materials.

For Marzarbol, we determined that grapes were 42.16 c.p. per lb, or 2.635 c.p. per ounce. This means to make a fluid ounce of wine our starting raw materials will cost 6.943 c.p.

Conversely, let's consider sheep. Using research from medieval times (sorry, I did not bother to save the source - I did not need to, I'm not writing a university thesis), an average sheep produced about 26.45 oz. of 'greasy' wool per year. A modern sheep produces much more, but it has the benefit of understanding genetics and careful breeding. Such things did not exist 400 years ago.

We can therefore set the initial value of wool as 1/26.45th of a sheep. After all, the sheep isn't doing anything else but producing wool so this is a fair equivalent. When we slaughter the sheep, we can use the same calculation to determine the price of its meat. Our price for a sheep in Marzarbol was 54.36 c.p., so our base price for greasy wool is 2.055 c.p. per ounce.

Let's use this last to get a price for refining wool.

Making Wool Cloth

There are two steps towards making cloth, which we will later use to make garments for the players. The first is the process greasy wool cut from the sheep into clean, carded wool that is ready for the spinning wheel. The calculation for doing this is to take our cost for greasy wool obtained from sheep (2.055 c.p./oz.) and divide it by the total references in Marzarbol (1 reference). The product of this calculation is the labour cost. This cost is thus added back to the original cost for greasy wool, making clean wool worth 4.11 c.p./oz. In excel I make a small table that looks like this:

Note that I have created this new table right underneath the old one. This way, I can have cell C23 = cell L16 - so that if I change the number of references for sheep it automatically recalculates the cost for clean wool, as shown. In time we will create a table that keeps track of all our references - but as ever, we leave that for another day.

The fewer the number of references for wool, the more expensive the labour will be. If we consider Crow's Nest, where the number of references for wool is only 0.2, the increase in the cost of labour would make the final price six times the original - and this would be the selling price in Crow's Nest, regardless of whether the cloth is produced there or brought from Marzarbol. Always assume that the price in a given market already accounts for things like demands, competition and so on! Trying to adjust further for these things will only spoil the elegance of the system.

Very well. We can now determine the cost for cloth in precisely the same way. Cloth is based on wool just as wool is based on sheep - except that we use cloth references instead of wool references. Once again, cloth has 1 reference, so the result is the same: the price of cloth is double that of clean wool:

Like the wool from sheep or the fluid ounces from the grapes above, there are various distillations that have to be tracked down one by one (if earth-like accuracy is sought for; otherwise, an individual user can make up numbers as necessary). Below is a list of prices calculated for Marzarbol based on the information accumulated thus far in the tutorial. As before, I'm including an excel table that can be downloaded so that the various calculations can be examined.

In time I will be addressing the problem of adding new data to the above table (since at the moment it would be painstaking to add new references individually), but before we get there, we want to move on to the pricing table: how to determine the price of individual items on our equipment table.

See Trade System

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