2 edition of theory of optimal multi-product output and pricing under joint costs and variable technology found in the catalog.
theory of optimal multi-product output and pricing under joint costs and variable technology
Alan Joseph Abouchar
by Institute for the Quantitative Analysis of Social and Economic Policy in Toronto
Written in English
|Series||Reprint series no. 24|
|LC Classifications||HB221 A26 1970|
|The Physical Object|
|Number of Pages||744|
Theory of Cost & Profit The conventional theory of the firm defends profit maximization objective on the following grounds: * Under the condition of competitive market, profit can be used as a performance evaluation criterion, and profit maximization leads to efficient allocation. The aggregate supply curve compares price level to the quantity of output that firms produce and sell, assuming that technology and prices of the factors of production are constant. In theory, as output increases, less efficient plants and workers will have to be employed, as well as existing workers paid overtime for additional work.
•A fundamental input to any price and revenue optimization (PRO) analysis is the price-response function (or curve) d(p). •There is one price-response function associated with each combination of product, market-segment, and channel in the PRO cube. The price-response function, d(p), specifies demand for the product of aFile Size: KB. Robinson and Lakhani () initiated a long research stream in marketing when they used the Bass model () to develop optimal pricing path for a new product. A careful analysis of the extant literature reveals that the research predominantly suggests that the optimal price path should be largely based on the sales growth by:
Cost forecasting for pricing new products should be based on the cost compression curve, which relates real manufacturing cost per unit of value added to the cumulative quantity produced. Similar to what we have done before with the revenue, it equals the variable cost times the quantity. We have now all the information to calculate the profit at each price point. The price that clearly maximizes the number of units sold is obviously zero. What is a price? At this price .
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The Theory of Optimal Multi-Product Output and Pricing under Joint Costs. and Variable Technology Alan Abouchar University of Toronto, Institute for the Quantitative Analysis of Social and Economic Policy I.
Introduction The usual marginal cost-price equalization rule, when applied to activities. The Theory of Optimal Multi-Product Output and Pricing under Joint Costs and Variable : Alan Abouchar.
Optimal joint pricing and lot sizing with fixed and variable capacity. This paper examines previously unexplored fixed and variable capacity problems of jointly determining an item's price and lot size for a profit-maximizing firm facing constant but price-dependent demands over a planning horizon.
We apply geometric programming to these Cited by: Multi-product pricing problems are discussed in Sect. joint replenishment and holding costs are incurred by the retailer.
Our analysis indicates that the optimal retail price under. Optimal Pricing, Inflation, and the Cost of Price Adjustment Edited by Eytan Sheshinski and Yoram Weiss These collected articles constitute what is perhaps the definitive study of pricing models under inflation, providing a solid basis for further research on this elusive question.
We argue that under mild assumptions, both the optimal profit function and the expected consumer surplus are convex functions of the variable costs. Consequently, when variable costs are random, both the firm and the representative consumer benefit from prices that dynamically respond to changes in variable costs.
Randomness in variable cost is Cited by: 1. for this single period model of joint pricing and inventory replenishment control. As a price setter and inventory manager, the rm needs to jointly choose the stocking quantity x, incurring per-unit cost c, and sales price p before the stochastic price dependent.
Mayo imposed strict input-output separability 11 and linear homogeneity in input prices (recall that separability was rejected by Karlson). According to Baumol et al. (, p. Such cost functions (with p and y multiplicatively separable) require all input demands to vary with outputs in the same fashion.
In fact, input ratios and cost shares are thus assumed to be independent of output. Inventory Control and Price Theory. Whitin; T. Whitin. Only in the event that other variables external to the cost minimization problem are assigned optimal values will the cost minimization problem be equivalent to profit maximization.
Conditions of reverse bullwhip effect in pricing under joint decision of replenishment and Cited by: Overview: Production and Cost I • Production Processes Variable Cost • Definition: – Costs that vary with the level of output – Not distinguishing between MC and AC (optimal level vs.
shutdown) • Cost structure is also important for strategic issues, such as competitive dynamics and entry. The Firm and Technology Pro–t Maximization Optimization Two-Step Solutions: the Cost Function I Break up the problem into two parts.
I Find the least costly way of producing any output level y: c(w,y) = min x wx subject to f (x) = y I Using this information, –nd the most pro–table output level: max y py c(w,y)File Size: KB. The total costs of production of a firm are divided into total variable costs and total fixed costs.
The total variable costs are those expenses of production which change with the change in the firm’s output. Larger output requires larger inputs of labour, raw materials, power; fuel, etc. which increase the expenses of production.
This output price index holds both technology and input prices constant at their reference situation levels. but does riot restrict substitution he-txx ccii either inputs or ative indexes are defined h restrict-ing the substitution possibilities of the firm. The- Fixed Cost Output Price Imh'v i_C).
Joan used algebra to come up with the optimal selling price for her standard jewelry box. This is the price that generates the greatest profit given the $15 variable costs and the $2, fixed costs. Her first task was to develop a demand equation.
The demand equation relates the quantity of the good demanded by consumers to the price of the good. Firms are price takers. This “competitive ﬁrm” assumption applies to both input and output markets and makes it reasonable to ask questions about (1) what happens to the ﬁrm’s choices when a price changes and (2) what can be inferred about a ﬁrm’s technology from its choices at various price Size: KB.
Moreover, whether the new firm should encroach on the existing market with high-end product or low-end product depends on the level of switching cost. If the switching cost is low, the new firm will benefit more from high-end encroachment and vice versa. We also find that it is not always optimal for the new firm to adopt the free entry by: 7.
Cost plus pricing is a cost-based method for setting the prices of goods and services. Under this approach, the direct material cost, direct labor cost, and overhead costs for a product are added up and added to a markup percentage (to create a profit margin) in order to derive the price of the product.
TOTAL COST: Sum of total fixed cost and total variable cost. TC=TVC+TFC. TVC=0, when the output is zero and increases with increase in the output. AVERAGE COST They are of three types.
AVERAGE FIXED COST: It is the per-unit cost of the fixed factors. AFC=TFC/Q. AVERAGE VARIABLE COST: It is the per-unit cost of the variable factors. Pricing of joint products which can be produced with variable proportions presents interesting analysis of price, cost and output. When it is possible for a firm to produce joint products in different proportions, the total cost has to be divided among different products because there cannot be a being e marginal cost.
INTRODUCTION TO THE PRICING STRATEGY AND PRACTICE Liping Jiang, Associate Professor In price In variable costs In sales volume In fixed costs A 1% rise/decrease Increases company profits by (%) 8 4 4 Customer Value Price Cost Product Product Cost Price Value Customer Cost-based pricing. the attention of other economists to the theory of full-cost pricing, it was hailed by many as an original and practical theory of price for it includes variable and fixed costs.
Whether a profit is considered as a cost, or as part of a gross margin added to part factor prices and of volume rates on costs under given technology.
The.We study the multiproduct price optimization problem under the multilevel nested logit model, which includes the multinomial logit and the two-level nested logit models as special cases.marketing. In the extreme, price theory in economics deals with how markets. pricing theories in economics Market Theory and the Price theories of factor pricing in economics pdf Israel Kirzners outstanding book on price theory is back in print.
It is been very difficult to obtain A. Kahn is an economist with the Economic.