A quota is an order placed by a government or trade body for a specific quantity of a specific good. Quotas are typically placed during times of economic prosperity, when a country may need to import goods to meet its demand. The exact formula for setting a quota depends on each country's relationship with the rest of the world, but quotas can vary between countries and even within countries from time to time.
Supply chain management is the study of how resources are acquired, and how they are used in production and delivery to enhance overall production efficiency. Supply chain management can either focus on the entire population of workers in production and distribution, or on a smaller subsample, such as in inventory, delivery, or support. Supply chain management can help managers understand the allocation of scarce resources to maintain productivity levels and reduce costs. For example, if a manufacturer makes a certain amount of widgets per day but needs significantly more widgets to meet demand, it would follow that the factory's inventory will be insufficient to meet demand, and additional widgets would need to be purchased in order to meet overall production efficiency.
Quotas are imposed by several types of governmental entities. Many governments impose trade and consumption quotas to protect local producers from foreign competition; some use quota systems to distribute raw materials, finished products, and services among national, regional, and local industries, and sometimes restrict entry of certain goods into the domestic market. In the United States, the government often imposes import duties, which are fees assessed on imports, in an effort to ensure that imported goods contribute to the national economy. Quotas may also be imposed by multilateral organizations, such as the European Union, United Nations, World Trade Organization, and other international organizations. The World Trade Organization does not impose trade restrictions directly, but encourages member countries to reduce their import tariffs and subsidize exports through various programs.
What Is a Quota?