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Today I would like to start another financial topic broadly given by the questions: Which factories to buy and in what order should they be upgraded? Given the market dynamics, high upgrade costs, the order turns out to be important, and difficult to figure out at the same time.

This will be an introduction focusing on one case - the inefficiency of the low level weapon factories. Although many people are aware of this, many more - judging from the state of the market - are oblivious of the fact that at the current prices, producing and selling weapons below Q5 is a waste of money and energy.

To see this, let us look at the production cycle. First option is to buy raw material (RM), say 1000 units, which would cost 20 country currency (cc) as of today (day 2631). With those one could produce 100 of Q1 weapons, 50 of Q2 weapons and so on. To write it concisely let us introduce the coefficient r, which is the number of raw materials needed for any given quality. The value of r is 10, 20, 30, 40, 50, 60, 200 for qualities 1, 2, 3, 4, 5, 6, 7, respectively.

With 1000 RM, the number of weapons produced is 1000/r, and the price that gives zero profit is one that earns those 20cc back, so accordingly the lowest acceptable price per weapon is

p₀ = 20cc/(1000/r) = 2r/100 cc, or
Q1: 0.20cc, Q2: 0.40cc, Q3: 0.60cc, Q4: 0.80cc, Q5: 1.00cc, Q6: 1.20, Q7: 4.00cc.

whereas the current prices p₁ in Japan are

Q1: 0.06cc, Q2: 0.17cc, Q3: 0.25cc, Q4: 0.50cc, Q5: 1.23cc, Q6: 3.30cc, Q7: 6.56cc.

Selling the produced quantity 1000/r at the above price would result in the following

profit = p₁*1000/r - 20cc, or
Q1: -14cc, Q2: -11.5cc, Q3: -11.67cc, Q4: -7.5cc, Q5: 4.6cc, Q6: 35cc, Q7: 12.8cc.

The quality 1 is the most striking, as you lose 14cc out of every 20cc invested - a 70% loss! This is a sad state of the market which cannot even be justified with overproduction, as the second option shows.

When one produces their own raw materials, the initial cost is only energy - say 40 units spent in 4 Rubber Plantations, which give 1000 units again. The energy cost for weapon factory is the same in both cases - 10 energy per 10 weapons so 1000/r in total.

The raw materials could be sold at this stage for 20cc of course, while producing the weapons would yield the same quantities and income as above, i.e., p₁*1000/r. In other words, Instead of earning 20cc for the raw materials, one would earn 6cc for Q1 weapons and so on. The profits listed above are exactly the difference between selling the produced weapons and selling the raw materials.

How does that depends on the raw material price? N units of RM give N/r weapons, and if the price of RM is p₂, the minimal sensible price per weapon should be just the total cost per number of weapons or (N*p₂)/(N/r) = p₂*r. For the lowest possible RM price of 0.01 we still get a loss for Q1, Q2 and Q3, as the required weapon prices are

Q1: 0.10cc, Q2: 0.20cc, Q3: 0.30cc, Q4: 0.40cc, Q5: 0.50cc, Q6: 0.60cc, Q7: 2.00cc.

To summarize, with the current weapon prices, producing weapons below Q5 is a loss of money and energy - even if has RM factories and produces them for fighting. It is cheaper to sell the RM and buy the weapons directly. Higher level factories are both profitable and necessary in the long run, but it seems they need to be upgraded without being used until Q5. Citizens trying to start their own sustainable business are advised to do so with RM and or food factories, which will be further analyzed in future articles.