Gross Margin Maximization Based on Price elasticity estimated using the Generalized Linear Model(Theory and Methodology)
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- SEKI Yoichi
- Faculty of Engineering, Gunma University
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- KAMEKURA Yamato
- GCC Inc.
Bibliographic Information
- Other Title
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- 一般化線形モデルによる価格弾力性推定に基づく粗利最大化(調査研究,<特集>サービス工学)
- 一般化線形モデルによる価格弾力性推定に基づく粗利最大化
- イッパンカ センケイ モデル ニ ヨル カカク ダンリョクセイ スイテイ ニ モトズク ソリ サイタイカ
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Abstract
We propose a method to set a daily selling price of a single item from historical sales data; for example, POS data. First, we estimate a generalized linear model to predict the store-level daily sales volume of the item. To estimate this model, we assume that the sales volumes are Poisson-distributed and that the price elasticity is constant. From this model, we can obtain a demand curve and an estimate of price elasticity of the item as the model parameters. The assumption of Poisson distribution enables us to estimate the price elasticity from low-level sales amounts. In addition, we clarify the relationship between gross profit and three variables: the price elasticity, the selling price and the purchase price. Using this relationship, we propose a method to set a selling price that maximizes the gross profit with respect to the price, and we indicate that there are two price policies that give us a local maximum gross profit: the regular price policy and the discount price policy. Considering long-term benefits, we show the existence of a scenario that provides a higher gross profit at the expense of short-term profits, if there is some method used to control the price elasticity. Finaly, we describe a case study using POS data collected from drug stores. We estimate the price elasticity of stores, and verify the policy of the stores.
Journal
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- Journal of Japan Industrial Management Association
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Journal of Japan Industrial Management Association 63 (3), 161-172, 2012
Japan Industrial Management Association
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Keywords
Details 詳細情報について
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- CRID
- 1390001205504408064
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- NII Article ID
- 110009554678
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- NII Book ID
- AN10561806
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- ISSN
- 21879079
- 13422618
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- NDL BIB ID
- 024039568
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- Text Lang
- ja
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- Data Source
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- JaLC
- NDL
- CiNii Articles
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- Abstract License Flag
- Disallowed