profit_max_withfixedcost {inventorize}

profit_max_withfixedcost

Description

maxmizing profit based on chage in price and elasticity taking into consideration fixed and variable costs.

Usage

profit_max_withfixedcost(
  fixed_cost,
  variable_cost,
  salesP1,
  salesP2,
  priceP1,
  priceP2
)

Arguments

fixed_cost

numeric, fixed cost for ordering and handling the SKU.

variable_cost

numeric, the cost of the SKU, changing by quantity.

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.

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: <[e-mail]>"

Examples

profit_max_withfixedcost(fixed_cost=200,variable_cost=20,salesP1=50,salesP2=100,priceP1=6,priceP2=4)