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A Mathematical Model for Optimizing Sales Mark-Up Price and Service Charge in a Profit-Maximizing Firm

Received: 5 May 2015     Accepted: 12 June 2015     Published: 29 June 2015
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Abstract

In the world of commerce and industry, every business outfit seeks to maximize its profit. The optimal values of sales mark-up price and service charge sustain this objective. This is true since some firms could sell their products for cash or for no money down with cost spread over some period of equal payments. Thus, the firm’s income comes from sales and the service charges collected on time payment accounts. In most cases, based on each firm’s experience, sales marked-up price and service charge were randomly fixed. In this paper, I present a mathematical model for optimizing sales mark-up price and service charge in a profit-maximizing firm. Testing the model on real life problems confirms that the model is accurate. The numerical results show that the model is amenable to financial analysis and computer automation.

Published in International Journal of Economics, Finance and Management Sciences (Volume 3, Issue 4)
DOI 10.11648/j.ijefm.20150304.13
Page(s) 347-351
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2015. Published by Science Publishing Group

Keywords

Mathematical Model, Sales Mark-Up Price, Service Charge, Profit-Maximizing Firm

References
[1] Hall R.L, Hitch C.J. 1952. “Price theory and business behavior,”Oxford economic papers, Oxford University press, pp. 12- 46.
[2] Sylos L.P. 1957. “Oligopoly and technical progress,” Harvard University press, pp. 49- 50.
[3] Colander D.C. 2001. “Microeconomics,”Mcgraw-Hill, New York.
[4] Sweezy P. 1939.“Demand under conditions of oligopoly,”Journal of political economy (1:1), pp. 568- 737. Koutsoyiannis A. 2003. “Modern microeconomics,” Macmillan press Ltd, India.
[5] Lewis D. 2014. “How to generate good profit maximization problems,”The journal of Economic Education(45:3), pp. 183-190.
[6] Daniel A.L., Brian W.U.2010. “Opportunity costs and non-scale free capabilities: Profit Maximization, Corporate scope and Profit margins”Strategic management journal by Wiley Interscience,(31:1), pp. 780-801.
[7] PrajitK.D., Radner R. 1999. “Profit maximization and market selection hypothesis,”The review of economic studies,(66:4), pp. 769-798.
[8] Dutta, P.K. 1994. “Bankruptcy and expected utility maximization,”Journal of Economic Dynamics and control, (18:3), pp. 539-560.
[9] Radner R. 1998. “Profit maximization withbankcruptcy and variable scale,”Journal of Economic dynamics and control,(22:4), pp. 849-867.
[10] Lau, A. & Lau, H. S. 2003.“Effects of a demand-curve’s shape on the optimal solutions of a multi-echelon inventory/pricing model,”European Journal of Operational Research,(147:3), pp. 530-548.
[11] Alchian, A. 1950.“Uncertainty, evolution and economic theory,”Journal of political Economy,(21:3), pp. 39-53.
[12] Alfred S. 1975. “Profit maximizing vslabour-managed firms: A comparison of market structure and firm behavior,” The journal of industrial economics, Wiley,(24:2), pp. 97-104.
[13] Yang, S.L., Zhou, Y.W. 2006.“Two-echelon supply chain models,”International journal of production economics, (103:2), pp. 104-116.
[14] Agralwal, N., Smith, S.A., Tsay, A.A. 2002.“Multi-vendor sourcing in a retail supply Chain,”Journal of production and operations management,(11:3), pp. 157-182.
[15] Ertek, G., Griffin, P.M. 2002. “Supplier and buyer driven channels in a two stage supply Chain,”IIE Transactions, (34:2), pp. 691-700.
[16] Matrix laboratory (MATLAB).1984-2007.TheMathWorks, Inc.
[17] Nwaeze, E., IsienyiS.U., Zhengui LI. 2013.“An augmented cubic line search algorithm for solving high-dimensionalnonlinear optimization problems,”Journal of the Nigerian mathematical society, (32:3), pp. 185-191.
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  • APA Style

    Emmanuel Nwaeze. (2015). A Mathematical Model for Optimizing Sales Mark-Up Price and Service Charge in a Profit-Maximizing Firm. International Journal of Economics, Finance and Management Sciences, 3(4), 347-351. https://doi.org/10.11648/j.ijefm.20150304.13

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    ACS Style

    Emmanuel Nwaeze. A Mathematical Model for Optimizing Sales Mark-Up Price and Service Charge in a Profit-Maximizing Firm. Int. J. Econ. Finance Manag. Sci. 2015, 3(4), 347-351. doi: 10.11648/j.ijefm.20150304.13

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    AMA Style

    Emmanuel Nwaeze. A Mathematical Model for Optimizing Sales Mark-Up Price and Service Charge in a Profit-Maximizing Firm. Int J Econ Finance Manag Sci. 2015;3(4):347-351. doi: 10.11648/j.ijefm.20150304.13

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  • @article{10.11648/j.ijefm.20150304.13,
      author = {Emmanuel Nwaeze},
      title = {A Mathematical Model for Optimizing Sales Mark-Up Price and Service Charge in a Profit-Maximizing Firm},
      journal = {International Journal of Economics, Finance and Management Sciences},
      volume = {3},
      number = {4},
      pages = {347-351},
      doi = {10.11648/j.ijefm.20150304.13},
      url = {https://doi.org/10.11648/j.ijefm.20150304.13},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20150304.13},
      abstract = {In the world of commerce and industry, every business outfit seeks to maximize its profit. The optimal values of sales mark-up price and service charge sustain this objective. This is true since some firms could sell their products for cash or for no money down with cost spread over some period of equal payments. Thus, the firm’s income comes from sales and the service charges collected on time payment accounts. In most cases, based on each firm’s experience, sales marked-up price and service charge were randomly fixed. In this paper, I present a mathematical model for optimizing sales mark-up price and service charge in a profit-maximizing firm. Testing the model on real life problems confirms that the model is accurate. The numerical results show that the model is amenable to financial analysis and computer automation.},
     year = {2015}
    }
    

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    T1  - A Mathematical Model for Optimizing Sales Mark-Up Price and Service Charge in a Profit-Maximizing Firm
    AU  - Emmanuel Nwaeze
    Y1  - 2015/06/29
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    JF  - International Journal of Economics, Finance and Management Sciences
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    AB  - In the world of commerce and industry, every business outfit seeks to maximize its profit. The optimal values of sales mark-up price and service charge sustain this objective. This is true since some firms could sell their products for cash or for no money down with cost spread over some period of equal payments. Thus, the firm’s income comes from sales and the service charges collected on time payment accounts. In most cases, based on each firm’s experience, sales marked-up price and service charge were randomly fixed. In this paper, I present a mathematical model for optimizing sales mark-up price and service charge in a profit-maximizing firm. Testing the model on real life problems confirms that the model is accurate. The numerical results show that the model is amenable to financial analysis and computer automation.
    VL  - 3
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Author Information
  • Department of Mathematics/Computer Science/Statistics/Informatics, Faculty of Science and Technology, Federal University Ndufu-Alike, Ikwo, Nigeria

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