A model for optimizing operating margin at the retailer’s point of sale

John Hogan ()
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John Hogan: Learning Tree International

Journal of Revenue and Pricing Management, 2023, vol. 22, issue 4, No 7, 306-311

Abstract: Abstract A unique construction of a linear demand curve valid over a single-sales cycle is used to determine the product price and inventory that optimizes a retailer’s operating profit margin. In addition to practical solutions to pricing and inventory, the approach provides insights into the appropriate response to over stocking, market segmentation, dynamic pricing, and price versus cost competition. The analysis is tractable, requiring only basic calculus and excel functionality, and is applied to real-world scenarios of pricing consumables and durables.

Keywords: Linear demand; Optimization; Dynamic pricing; Profit margin; Inventory; Retail (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1057/s41272-022-00409-3

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