Maximization of the expected return-profit of a multi-productive enterprise under conditions of uncertainty : practical application in a food firm
2007
Ananiadis, ioannis
The aim of the present paper is to determine the optimum level of production for each product a company produces so that, by knowing the probability density function of the demand for the above-mentioned products, we can achieve the maximum possible results within the framework of the company's capacity on the one hand and of the available resources on the other hand. In the present paper, we close with a formula correlating the probability density function of the demand with a given specific production presenting the selling price and the variable costs both subjected to changes. By collecting data related to the sale of each product, we formulate or arrive at the form of the demand distribution through the method of the .adaptation to the curve., which corresponds to different production levels for each product. Then, by taking the sum of the maximum return-profit for each product that corresponds to a specific production, we arrive at the desired result. We believe that this particular methodology, in combination with the principles of financial reporting and costing, has much to offer given that the use of this model constitutes a competent tool through which the management team may organize its product portfolio in order to achieve the maximum possible results.
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