A common example used is when there was a massive shortage of steel in the early 1970s. Companies that required steel as a primary material (e.g. appliance manufacturers, construction companies, etc.) were left with the majority of their projects on hold because they were unable to find steel and the little steel available was very expensive.

• The system that companies can use to avoid such bottlenecks due to scarcity is by using derivative contracts. The company can, for instance, buy forward contracts on steel for delivery in future years in order to lock in the quantity and price of steel to be sold. In addition, companies can also use budgeting technique to forecast their need for steel and order these amounts of steel in advance in order to have a legal contract signed with a supplier. Although scarcity is part of life and can never be eliminated, these tools can help manage its risk.