MHB Averages problem i understanding

[Pst291]

Hi guys

I wasnt sure quite where to post this so apologies if I am in the wrong section.

Ok i have a problem in something I've been trying to do and i just can't "understand" the answer.

Ill lay it out here and try my best to explain myself

Ok ,If i buy 1000 items from my friend (pencils for example) and they each cost 0.00000060

I buy a further 11 from my friend for 0.00000010 each.

Ok so I've bought 1011 at a rough average price of 0.0000005946.

Heres the part i can't understand.The average price is as above yet if i sell 1000 at 60 id still get 0.0006.

If i buy at an average price then surely if i sell one portion of those pencils id have to sell them at the average price bought.?

This is what I am havig trouble with ...the concept of average ,sure the average price etc IS there but at no point does it seem to apply.

If i bought those pencils at an average price i should be able to sel them at that average price for no loss.If anyone can see the flaw in my madness please explain it

Thanks Pst

 

[Jameson]

Hi Pst291,

Welcome to MHB!

I suggest we use numbers without so many leading zeros, just to simplify the discussion. :)

I don't quite follow your question but I do agree that if you buy 1000 pencils at some price then buy 11 pencils at a slightly lower price, the total average price will go down a bit. If you sell them at per 1000 price then you actually make a little profit.

Can you explain a little bit more what you mean and can we pretty please use easier numbers?

 

[Pst291]

Hi Jameson

Ok ill try in pence,should make things easier

What I am trying to figure out or understand is

Say I buy the 1011 pencils from person b at the prices of 1000 at 60p each and 11 at 10p each

can i buy the 1011 at the average price without leaving person b out of pocket.

Whenever i run it person b always ends up out of pocket or at least doesn't have enough to buy another 1000 pencils at 61p (as that would be the current buy price 60p being the current sell price).I only want to sell the 1000 so the 11 could be given back to person b

What i can't understand is the average price ,it exists but i can't get it to apply to me.If i or anyone buys a grouping of items at differnt prices it seems the party selling them is out of pocket.EDIT .sorry i should point out that the 11 are being sold off cheap .The sale price should be 60p but they are selling to me for less than current value to bring my price down

 

[I like Serena]

Hi Pst291! Welcome to MHB! :)

So you've bought 1011 pencils for a total price of 60110 pence.
The average you've paid per pencil is 60110 / 1011 = 59.46 pence.

If you sell them back for 59.46 each, you'll get 1011 x 59.46 = 60110 pence, which is exactly what you've paid for it.

So no one is paying out of pocket...

 

[Pst291]

Hi I like seeker

I just want to sell the 1000 of the 1011 having bought them for an average price of 5946.They would be sold to an outside party let's say person c (at current sale price of 60p)

The 11 can go back to person b but person b must not be out of pocket.person b is currently out of pocket on the 11 as they sold to me at 10p each instead of 60

 

[I like Serena]

Hi I like seeker

I just want to sell the 1000 of the 1011 having bought them for an average price of 5946.They would be sold to an outside party let's say person c (at current sale price of 60p)

The 11 can go back to person b but person b must not be out of pocket.person b is currently out of pocket on the 11 as they sold to me at 10p each instead of 60

When you sell the 11 back to b for the average price, b gets them for the average price he sold them for - no loss.
He might as well have sold them for 59.46 pence to begin with.

 

[Pst291]

no loss when person b gets em back ,,,, there's my problem

lets assume i (Pst) have 10,000 pencils and person b has 5000

Pst buys 1011....Pst 11011 pencils ,down -60110p
......Per,b 3989 pencils,up 60110p

Now Pst would have to be down 59460 to have bought the pencils at the average price of 5946 so in order to force this let's get person b to make up the difference...(from the 60110)

Pst 11011 pencils ,down -59460
Per,b 3989 pencils ,up 59460 plus down 650 that he sent to Pst
(59460+650 being the 60110)

so when person b buys back the 11 at the avg price sold

per,b 4000 pencils ,down 654 cost of 11 so 58806
Pst 11000 pencils, up - 58806

so if Pst sells the excess pencils at current sale price of 60 to an outside party he gets 59910p
(after fees 0.15% this may not convert right into pence but I am assuming it does)

so Pst 10000 pencils up +1104
Per,b 4000 pencils up +58806

58806+1104 is 59910

current sell price 60p so not enuff to rebuy 1000 even at sell price let alone TRY and buy in at current buy price of 61

So when per,b buys back in at average price,How on Earth can there be no loss ?

Or to look at it another way i bought 11 pencils 50p cheaper each yet I am up person b is down and overall can't buy back in even at current sell price when i combine my gain with their loss...its bizarre

 

[Pst291]

I may have solved it ,,,altho I am up by waaay more than i thot i would be ,,, will update when i can positively confirm it

 

[Pst291]

Sorry for the wait on the update guys ,,managed in the end up to end up with a near 100% profit but have really no idea how I've managed it.

Im still going thru the figures and again ill update once i can explain it