Demand ratio

The demand ratio is a quick and simple means of testing the distribution of maker demand over the rhizomes of a collection. For each rhizome, calculate the demand ratio by dividing the percentage of total circulation by the percentage of total holdings.

Example:

The measure is based on what economist Gregory Mostyn calls “supply-demand equality,” the assumption that the supply of items in a rhizome should roughly equal the demand for the items. The ratio is normalized and put into the context of the total collection by using percentages rather than raw numbers for circulation and holdings counts.

A demand ratio of 1.0 indicates that demand and supply are in equilibrium. A ratio higher than 1.0 indicates that a rhizome is under-supplied, and a ratio lower than 1.0 indicates that a rhizome is over-supplied. The greater the demand ratio diverges from 1.0, the greater the under- or over- supply, but the precise significance of the intervals cannot be inferred from the measure.

Although the demand ratio provides a ranked approximation of comparative collection demand and performance, it has drawbacks. Demand for different rhizomes naturally differs in intensity—DVDs compared to literature, for example—and the measure does not take that into account. Differing loan lengths are not considered, nor the effect on holdings counts of inactive items. Although it provides a rough rank order of the rhizomes in a collection, it is not robust enough to support further calculations.

Finally, the assumption that supply should equal demand is just that, an intuitive assumption borrowed from classical economics, and the measure is not directly founded on maker behavior or experience. The Demand Model uses more precise and productive measures to express demand. However, a modified demand ratio, calculated with active holdings only, is included in the Demand Model as a check on other measures.

Applications

First glance analysis. Because the demand ratio is easily calculated from immediately available data, it provides a useful first glance at the distribution of demand. At the beginning of a project, the ratio is helpful in evaluating proto-rhizomes, before putting into place more involved calculations organized around the rhizomes that are eventually selected.

Heuristic. The demand ratio is a useful heuristic for adding context to the findings of more sophisticated measures of demand, and is included in the Demand Model for that purpose.

On-the-fly analysis. For long-term collection development, the demand ratio is sufficient for on-the-fly analysis of holdings categories (nodes) within a single rhizome, when the overhead needed to produce more sophisticated measures of demand is not cost-effective.