Our team is still confused about the difference between a retail industry change and a commodity change. The attached image shows results after modeling $1M to either retail, commodity, or manufacturing. A $1M automobile commodity change yields a value add of $1.2M, while a $1M industry retail change to automobiles yields a value add of $1.6M. Our questions are the following:
1. What are the differences between modeling $1M to a commodity change for automobiles and modeling $1M to retail automobiles? We were told yesterday that retail would not include the final cost of the good, but in the table above, the results for a retail change are higher than the results for a commodity change.
2. From the results alone, it appears that retail captures the value added in every upstream link in the supply chain. Why then, are the commodity results and retail results not equal?
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