1. Research the global supply and demand for diamonds and how it affects prices. What role do “diamond reserves” (inventory) play in determining prices? Explain. What do you think the supply and demand curves for diamonds look like? Try to sketch it.

2. What are the detailed components of inventory carrying costs in this situation? What other factors could influence maintenance costs, such as security costs, obsolescence costs, and others? What is your estimate of inventory carrying costs as a percentage of item value? Explain your reasoning.