Profitability maximization

Simplified Profit Maximization An Illustration of Non-Constrained Optimization.—Before discussing programming problems we illustrate in the next two sections two common forms of elementary optimization. 

Problem of approximation, 52 Product ensemble, 198 Production scheduling problem, 297 Profit maximization, 286 Programming, dynamic, 305 Programming, linear (see Linear programming)... 

We can then conclude that while the discrete time STN and RTN models are quite general and effective in monitoring the level of limited resources at the fixed times, their major weakness in terms of capability is the handling of relatively small processing and changeover times. Regarding the objective function, these models can easily handle profit maximization (cost minimization) for a fixed time horizon. Intermediate due dates can be easily modeled. Other objectives such as makespan minimization are more complex to implement since the time horizon and, in consequence, the number of time intervals, are unknown a priori (see [11]). 

We can conclude that the continuous-time STN and RTN models based on the definition of global time points are quite general. They are capable of easily accommodating a variety of objective functions such as profit maximization or makespan minimization. However, events taking place during the time horizon such as multiple due dates and raw material receptions are more complex to implement given that the exact position of the time points is unknown. 

From the different planning methods available within SNP, SNP optimization is selected because it offers the best fit to the customer requirements outlined above. The main reasons for this decision are the multisourcing characteristics of the supply network as well as the fact that the objective functions used by the SNP optimizer, profit maximization or cost minimization, correspond to the planning philosophy favored by the customer. In addition to SNP optimization with its cost-based approach, SNP offers several heuristic-based planning methods which follow a rule-based logic. 

The definition of the cost model is of crucial importance for controlling the behavior of the S N P optimizer. One of the central questions is whether to maximize service level, which usually means using high penalties for non and late delivery, or to maximize profits, which requires the use of realistic sale prices. In the case study scenario, the nondelivery cost levels reflect real sale prices sufficiently close to enable a profit maximization logic. 

Focus on supply volume planning to fulfil given demand, reach a feasible plan and minimize supply costs also using subjective penalties instead of actual cost parameters from controlling future-oriented profit-maximization according to profit and loss statement and inventory value planning not covered so far... 

Addressing the objective of profit maximization instead of cost minimization... 

This example illustrates the planning of petroleum refinery operations as an ordinary single objective linear programming (LP) problem of total daily profit maximization. 

Objective function a profit maximization function over the time horizon is considered as the difference between the revenue due to product sales and the overall costs, with the latter consisting of the cost of raw materials, operating cost, investment cost, and inventory cost ... 

However, since our objective is profit maximization, the EVPI can be calculated as ... 

The previous exposition, of course, has been carefully styled to lead to what appears to be a benign policy. It accepts as the baseline a single price determined either under profit maximization or under price controls, and then asks whether, relative to that baseline single price, allowing price discrimination would be in societ/s interest. 

It remains possible that sponsors can refine this estimate through more careful arguments. In what follows, I assume that a profit-maximizing company will invest in R D whenever the promised reward exceeds its per-drug development costs in expectation. I consider two cases. 

Nowsuppose that price discrimination is perfect. In this case, manufacturers can offer deep discounts to the poorest patients with no effect on patent revenues. In fact, profit-maximizing manufacturers will automatically offer such discounts until prices reach their marginal cost of production (Reinhardt, Chapter 2). This means that sponsors should subsidize production only if the desired access price is below marginal cost. 

Big -10 >250 Divisions of large publicly owned enterprises >3 sites, total reactor volume >500m short-term profit maximization Large in-house capabilities (R D, manufacturing, marketing) Growth by acquisitions... 

While efficiency dictates that different prices are charged in different markets, observable price differentials are not always due to reasons of economic efficiency or profit-maximization. Pharmaceutical prices are widely subject to nation-specific government regulation and a host of other factors. Bale (1998) provides a comprehensive review of potential reasons for price differences across countries. These include differences in such factors as IPR regimes, product liability laws, inflation rates, exchange rates, governmental price controls, per capita income, and regulatory systems. 

As a profit maximizing monopolist, you face the demand curve Q = a + (3P + e. In the past, you have set the following prices and sold the accompanying quantities ... 

Suppose your marginal cost is 10. Based on the least squares regression, compute a 95% confidence interval for the expected value of the profit maximizing output. 

Using a well known result, for a linear demand curve, marginal revenue is MR = (-a/ ) + (2/p)q. The profit maximizing output is that at which marginal revenue equals marginal cost, or 10. Equating MR to 10 and solving for q produces q = a/2 + 5p, so we require a confidence interval for this combination of the parameters. 

The objective function of a supply network design model can either minimize costs or maximize profits. In practice the production function is often required to assume that all forecasted demands have to be met. In this constellation cost minimization and profit maximization lead to identical results and consequently cost minimization models are used. From an economic perspective this simplification can be justified in cases where a high share of fixed costs allows the assumption that any product sale con-... 

Canel C, Das SR (1999) The uncapacitated multi-period facilities location with profit maximization. International Journal of Physical Distribution Logistics 29 409-433... 

Mohamed ZM (1999) An integrated production-distribution model for a multi-national company operating under varying exchange rates. International Journal of Production Economics 58 81-92 Moon S (1989) A Profit-maximizing Plant-loading Model with Demand Fill-rate Constraints. Journal of the Operational Research Society 40 1019-1027... 

Rodowskas C. 1996. Space allocation and profit maximization. Pharmacy Times 62 70. 

The Cournot model is a standard oligopoly model, and it is often used in competition policy as a first approximation of how competition works (Martin, 1993). For our modelling purposes, the Cournot oligopoly model offered the best combination - faithful representation of market cost structure and behaviour, and flexibility to incorporate a mixture of profit-maximizing and sales-maximizing objectives - as well as tractable conversion into a spreadsheet modelling application. 

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