| profit_max {inventorize} | R Documentation |
profit_max
Description
maxmizing profit based on chage in price and elasticity.
Usage
profit_max(cost, salesP1, salesP2, priceP1, priceP2, na.rm = TRUE)
Arguments
cost |
numeric, cost of the SKU. |
salesP1 |
integer, unit sales in period 1. |
salesP2 |
integer unit sales in period 2. |
priceP1 |
numeric, average price of sku in period 1. |
priceP2 |
average price of sku in period 2. |
na.rm |
logical with a default of TRUE |
Details
This function is helpful to determine the elasticity of a product with effect to price change, the figure could be negative as the change is price is negative. it translates as for one currency unit change in price, this much is ecpected in units in increase of sales. condition must be that Price in period one was more than price in period 2 and sales in period two was more than sales in period 1. a proposed price is given to period 3 which is future period to maxmize profit. it is advisable that elasticity to be calibrated by testing it on several periods. this function does not take into account advertising and campaigns,i.e external factors. yet it's a good indicator of best pricing per SKU.
Value
the elasticity ratio in unit sales, the -ve number represents the increase in sales for each decrease of unit currency.
Author(s)
"haytham omar email: <haytham@rescaleanalytics.com>"
Examples
profit_max(cost=2,salesP1=50,salesP2=100,priceP1=6,priceP2=4)