Memoirs of the Faculty of Engineering, Okayama University
Published by Faculty of Enginerring, Okayama University

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Memoirs of the School of Engineering, Okayama University

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Price Determination Method Based on Price Elasticity

Li Zhenzi Department of Systems Engineering
大崎 紘一 Department of Systems Engineering
梶原 康博 The Graduate School of Natural Science and Technology
In this paper, we propose the price determination method using the parameter of the price elasticity that shows the relation between price and demand. Firstly, the state of the price elasticity is examined under the condition that the relation between price and demand are assumed by the inverse proportional function, the linear function and the quadratic function. Secondly, the profit is estimated for each product by break even point analysis. And the price is determined under the condition that the relation between the demand and price is shown by one of three demand-pridce functions above mentioned.