# Milk

prosoccer
Posers and Puzzles 12 Jul '07 20:32
1. 12 Jul '07 20:32
Why do all fat contents of milk cost the same amount? For example, shouldn't skim milk be cheaper than homo milk because the extra fat that is skimmed off is then used to make other dairy products?
2. wolfgang59
Mr. Wolf
12 Jul '07 21:02
What if the cost of skimming milk was higher than the value of the fat skimmed off? Then simmed milk would be more expensive!

3. 12 Jul '07 21:35
Originally posted by prosoccer
Why do all fat contents of milk cost the same amount? For example, shouldn't skim milk be cheaper than homo milk because the extra fat that is skimmed off is then used to make other dairy products?
Why do all fat contents of milk cost the same amount? For example, shouldn't skim milk be cheaper than homo milk because the extra fat that is skimmed off is then used to make other dairy products?

Price is set by demand rather than cost. If consumers find the price of skim milk too high, they will buy less of it. Producers will be forced to lower their price for skim milk or lose sales to other milk vendors or milk substitutes. Only when the market price is less than cost does cost come into play. If market price falls below cost, the higher-cost producers of skim milk will stop selling skim milk. This will reduce supply, allowing the more efficient skim milk producers to raise prices until the market finds equilibrium between supply and demand.
4. 13 Jul '07 00:39
Originally posted by ParShooter
[b]Why do all fat contents of milk cost the same amount? For example, shouldn't skim milk be cheaper than homo milk because the extra fat that is skimmed off is then used to make other dairy products?

Price is set by demand rather than cost. If consumers find the price of skim milk too high, they will buy less of it. Producers will be forced to low ...[text shortened]... im milk producers to raise prices until the market finds equilibrium between supply and demand.[/b]
If price is base solely on demand, what are the chances that demand for all types of milk are exactly equal?
5. leisurelysloth
Man of Steel
13 Jul '07 00:52
Originally posted by prosoccer
Why do all fat contents of milk cost the same amount? For example, shouldn't skim milk be cheaper than homo milk because the extra fat that is skimmed off is then used to make other dairy products?
Perhaps you could figure a way to de-homogenize whole milk and make your own skim milk plus cream or butter. I somehow doubt if this would end up saving you a bunch of money. If I had to guess, I would guess that there really isn't a big difference in profit margins between the grades of milk.
6. AThousandYoung
13 Jul '07 14:33
Originally posted by ParShooter
[b]Why do all fat contents of milk cost the same amount? For example, shouldn't skim milk be cheaper than homo milk because the extra fat that is skimmed off is then used to make other dairy products?

Price is set by demand rather than cost. If consumers find the price of skim milk too high, they will buy less of it. Producers will be forced to low ...[text shortened]... im milk producers to raise prices until the market finds equilibrium between supply and demand.[/b]
Price is set by both supply and demand, not just demand. Otherwise gold would be much cheaper, for instance.
7. 13 Jul '07 15:45
Originally posted by leisurelysloth
Perhaps you could figure a way to de-homogenize whole milk and make your own skim milk plus cream or butter. I somehow doubt if this would end up saving you a bunch of money. If I had to guess, I would guess that there really isn't a big difference in profit margins between the grades of milk.
It would have to be a big operation to be effective.
8. leisurelysloth
Man of Steel
13 Jul '07 18:30
Originally posted by prosoccer
It would have to be a big operation to be effective.
True. But once you've got that big operation, then you've got to figure out something to do with all of the products. You'd need to process/package, keep them cold, shipping, marketing, etc. My suspicion is that that's where most of the cost is (not in the raw materials), and that's why there isn't much, if any, difference in the price of the grades of milk.
9. 18 Jul '07 17:58
I consistently see nonfat milk cheaper than 1%, 1% cheaper than 2%, and 2% cheaper than whole.
10. 19 Jul '07 01:49
Originally posted by prosoccer
... shouldn't skim milk be cheaper than homo milk...
Eugh!
Leaves a nasty taste in your mouth.
11. 19 Jul '07 04:00
Originally posted by HolyT
I consistently see nonfat milk cheaper than 1%, 1% cheaper than 2%, and 2% cheaper than whole.
I've never seen it like that, though it should be.
12. 19 Jul '07 04:01
Originally posted by Squelchbelch
Eugh!
Leaves a nasty taste in your mouth.
Don't be hating skim, it is better for you.
13. PBE6
Bananarama
20 Jul '07 15:142 edits
I'm turning this back into a poser (well, at least a thread with something to do):

Say you have a herd of 10,000 cows that each produce an average of 1 kg per day, with an average fat content of 3.7% and an average carbohydrate content of 4.6% (both by weight), and you have a milk fractionator that separates the milk into skim (0.1% fat), reduced fat (2% fat), homo (3.25% fat), full cream (5% fat), table cream (10% fat), half-and-half (18% fat), and heavy cream (35% fat).

(a) How much of each stream should you produce per day to MAXIMIZE the VOLUME? Assume the density of both carb water and regular water is 1000 kg/m3, and the density of the milk fat is 915 kg/m3.

(b) How much of each stream should you produce per day to MAXIMIZE the REVENUE if you can sell your products at the following prices:

i. skim = \$0.50 per litre
ii. reduced fat = \$0.60 per litre
iii. homo = \$0.75 per litre
iv. full cream = \$1.00 per litre
v. table cream = \$1.50 per litre
vi. half-and-half = \$2.25 per litre
vii. heavy cream = \$4.00 per litre

ASSUMPTIONS:

1. The fractionator is capable of perfect separation.
2. You have as much make-up water as you need.
3. The carbohydrate content for any stream can't fall below 3%, or the milk will taste "off".
4. All the carbs go with the water.

Enjoy!

NOTE TO SELF: I'm going to use a spreadsheet to solve this 'cause there are way too many numbers in this one...