Gun stores continue to be a never-ending source of hilarity. Walk into your local shooting emporium and ask why there is an ammo shortage, and you’ll hear inane speculation coupled with a conspiracy theory or two. The reality is that the supply chain for ammunition is relatively inelastic, and is easily overwhelmed by a sudden jump in sales.

As one industry consultant has told me, ammunition demand over the years has been remarkably predictable. Ammunition wholesalers know (within a certain margin of error) how many units of each caliber they’ll sell in the coming year, and approve purchase orders for the delivery of that amount of product during that year.

Ammo makers, too, know with fair certainty how much they’re going to sell to the wholesalers during that period, and sign contracts for the purchase of sufficient components to produce those products. They don’t typically keep large stores of components on hand, as standing inventory is expensive, so components are delivered on a “just in time” basis.

The suppliers of those components do the same thing with raw materials; again, ammunition is a stable business, which allows them to forecast with pretty good accuracy the stuff they need to make the components they sell. This pattern repeats itself on up the chain, all the way to the people who mine the stuff necessary to make a single cartridge.

Along comes a huge, sudden spike in demand. Retailers all over the country are suddenly swamped with ammunition purchases, and quickly call their suppliers to get more. The first few calls are rewarded with replacement stock, but soon the wholesaler’s shelves are bare too – their entire year allotment of ammunition is gone in just a few days. Read more

Source: Grant Cunningham