Optimal Selling price for stores

[Guest]

I disagree here, if the formula (model) is properly created, then it will not change with time.

How can it not change when the variables are constantly changing? Whatever formula worked with one set of variables, is not likely to work with a completely different set of variables. Reason? Because certain variables will alter the formula calculation itself, and make it invalid.

If it does change, then the model was never correct to begin with and only coincidentally gave the same results for the set of data it was modeled on.

Precisely why a set "formula" can't be established. It's like chasing your tail, you will never nail down the exact formula because the variables are constantly changing, altering how any formula would calculate the data.

With enough data, an accurate representation of the true formula can be constructed that will not change as the inputs change.

Again, there are certain aspects of the game that would alter the formula because you can't determine these factors. If those aspects change constantly, there is virtually no way to establish a "model" and no formula is going to be perfectly accurate all the time.

That is the whole point of modelling. As I said before, there will be inputs that must be updated each time, but this would simply be punching in a few numbers. I believe that the formula we are discussing would require no more than about 5 to 10 pieces of information that are easily available in the game (avg price, avg quality, population, supply, demand, etc...).

I will agree it looks good in theory, but the thing you are not realizing is, the game is constantly changing and evolving. It's like trying to develop a formula to determine how many cells are in a person's body, it simply can't be done, too many factors are in play and constantly changing, and too many variables are unknown. No 'formula' is ever going to be determined with absolute validity, as the parameters will change in time.

You can gather all the informational data and determine a formula, but the formula will only be valid if the parameters and variables remain constant. When population increases, supply decreases, demand fluctuates up and down, people sell for cheap, people price gouge, new shops emerge, other shops close, some expand, some change products, others run out of stock and sit idle until the owner returns to restock, people put ads in their stores and sell more, and probably several more things I am not thinking of at the moment... all of these things will have an effect on your formula, and render it useless in determining an absolute "optimal rate" all the time.

Now, for argument sake, one could say, there IS a formula, it's built in to the game, it's how the game actually operates and figures your stats and data. So a formula does indeed exist, but this internal formula has all of the needed data already there, it doesn't need to go find it, and all the things we have no way of possibly knowing, this formula knows instantly because it is part of the program. What people are attempting to do here, is reverse-engineer this formula, and it simply can't be done in practicality, and is an exercise in futility.

I'm not trying to be harsh, I just believe there is a much simpler way to determine the result you are trying to develop some formula for, it's revealed to you in the game, you just need to understand how it is interpreted, and you can produce relatively satisfactory results without giving your brain a hemorrhage in a pointless attempt to try and 'discover' some secret formula. But hey.... some people like to exercise their brains by working out complicated formulas and crunching numbers... and if any of them are seeking some part-time fun, I have a stack of tax forms and receipts here, I will be more than happy to give them hours of immense pleasure doing my tax returns!

[Guest]

Yes, a linear regression will produce a formula to determine optimal price at all times. You said that the optimal price changes all the time - this is true - but a formula would be found precisely to account for those factors.

The formula for sales time is something along the lines of

Z - Y(advertisement level) - X(average price - your price) + W(average quality - your quality) + V(% demand satisfied)

And the trick is finding V, W, X, Y, and Z. The goal is precisely to determine how all those factors affect sales time.

Ah, but wait... those are not the only variables that determine sales time. You also have population of the given store area, supply of that product, demand for that product, how much is currently being sold of that product, what price it is being sold for (not just an average price, but also mean price) You also have various rates of sale depending on the size of various stores in the area, new companies adding to and compounding the supply rate, people closing stores and lowering the supply rate, as well as lowering the population which lowers demand. Most of these, you simply can't determine, you have no data on it, only the game has this information.

No doubt, you can develop some kind of a formula that might work in most cases, but this will never be an accurate means of finding the absolute 'optimal rate' at any given time for any given product. And if you DID somehow stumble upon a way to calculate the 'optimal rate' for a certain product, it would only be valid for that product in that area at that point in time, in your size store with your amount of advertisements. The moment you change these parameters, and try to apply your formula to another set of parameters, it will fail.

The method I have suggested is by no means a 'scientific' formula, and it's not [censored] or perfect, but it is simple and fast, and eliminates the need for Excel spreadsheets and data collection. But, if you are into Excel spreadsheets and data collection, that doesn't do you too much good. I'm not into that sort of thing, I just enjoy the economic simulation game of Kapilands.

[Guest]

Half of those "extra factors" you mentioned - supply, population, etc. are covered in the formula I described above.

The other half like "the size of the stores," I seriously doubt have any bearing on sales time.

And once again you say that "things are changing all the time." Listen - a formula exists so that you can plug in the data THAT IS ENTIRELY AVAILABLE TO YOU. You have to input the variables every time, but that's a trivial matter.

I've written an article in the newspaper detailing EXACTLY the factors that affect sales time, and it's been passed by Tycoon. All the information is available, it's just a matter of figuring out how it's put together.

[Guest]

Half of those "extra factors" you mentioned - supply, population, etc. are covered in the formula I described above.

The other half like "the size of the stores," I seriously doubt have any bearing on sales time.

And once again you say that "things are changing all the time." Listen - a formula exists so that you can plug in the data THAT IS ENTIRELY AVAILABLE TO YOU. You have to input the variables every time, but that's a trivial matter.

I've written an article in the newspaper detailing EXACTLY the factors that affect sales time, and it's been passed by Tycoon. All the information is available, it's just a matter of figuring out how it's put together.

Z - Y(advertisement level) - X(average price - your price) + W(average quality - your quality) + V(% demand satisfied)

Maybe I am missing it here, but I see nothing in your formula about population, supply, demand, or any of the other intangibles I mentioned. These are things that constantly change within the game, and they do effect that 'optimal rate' you are trying to formulate. I certainly won't dispute Tycoon, if he thinks you have perfected some formula to determine the best possible rate under any circumstance, then I concede, you've made your point, but from what you've posted here, I don't see a valid formula in all scenarios, under any condition. I see a potential formula that might help you find a more optimal performance than just guessing at it, but then again, so does my method, and it's a whole lot easier to do.

[Guest]

V(% demand satisfied) is based on supply and demand, which in turn are based on population. So all the intangibles you mentioned are covered.

And the formula I named isn't necessarily correct and of course doesn't calculate how much each factor affects sale time, but it is almost certainly roughly how it works.

[Guest]

[quote="cygnus"]That

[Guest]

cygnus - you're correct in saying that price and time is on a straight line.

What you've calculated is revenue/time, which does increase as price lowers, because you sell faster and faster.

However, it's important to take into account that it costs money to buy or produce the materials to sell. What you've calculated is revenue/time, not profit/time, which is what matters.

Consider these numbers (I'm going to make them up for the purposes of this example, but trust me, this is how it works)

Sell price Sold/hr Revenue/hour
20 10 200
19 12 228
18 14 252
17 16 272
16 18 288
15 20 300

But now, take account that you paid a price to obtain the product:

Price paid Sell price Profit/unit Sold/hr Revenue/hr PROFIT/HR
10 20 10 10 200 100
10 19 9 12 228 108
10 18 8 14 252 112
10 17 7 16 272 112
10 16 6 18 288 108
10 15 5 20 300 100

So, in this simulation, the optimal sell price for this product is somewhere between 17 and 18.

This is the key to what this thread is trying to find. There's an optimal profit/hr rate to sell at based on sale time, and the price you paid for your product.

Wow, JuliusC you have mentioned it, I just wanna do nothing but shake your hands.

In addition, I wanna point out the data shows the relation between T and P is not linear, although it seems that from the first 3 couples.

[Guest]

What you've calculated is revenue/time, which does increase as price lowers, because you sell faster and faster.

However, it's important to take into account that it costs money to buy or produce the materials to sell. What you've calculated is revenue/time, not profit/time, which is what matters.

OK, JuliusC I see your point.

I

[Guest]

Further more, is the result from a 2-employees gas station?

Yep, I its 2 employees.
Q0
Location: Germany

[Guest]

I hope you don't mind my intervention.

You are very welcome!

Firstly, your math logic is totally right and if there is no market, your profit calculation is right, too.

However, we are fortunate to have a market, even if it is yet so efficient. So you should consider splitting your whole procedure into 2 parts, then calculate how should you get profit max. in either part with the relevant buildings.

Then the cost in "the gas station profit max. problem" should be the market price rather than the "showed cost" in the warehouse.

I think I did it. With the most simple data : 1 building

Price : 18
Quantity sell in 24 hs : 2.873
Price*Qty : 51.717
Qty*Cost : 11.349
Profit : 40.368

Price : 25
Quantity sell in 24 hs : 792
Price*Qty : 19.812
Qty*Cost : 3.130
Profit : 16.682

Since, I have a well and a factory. I only need power to get Gas, so for the example, the cost to make 1 Gas would be

1 Gas = $ 1,95 + 25 * Power

I take Power to be $ 0,09 but you can do it with other values (from 0,06 to 0,12) and the max profit price doesnt change, its allways be $ 18 in the example.

I have tested in the range 18-25

Of course, If i have more employees the optimun price will change, if I can produce more in 24 hrs, the price will change, and so on.

But, my point is :
a) In this moment, I can produce X Oil, and Y Gas in 24 hrs.
b) In this moment, I can sell Z Gas in 24 hrs.
Question : Which is the price (max profit), under this conditions ?

At last, I think you have a good knowlege background, it is nice to discuss with you as well as JuliusC, if there is any mistake, don't hesitate to point out.

There are a nice community here, I had learn a lot reading this forum. I think that any discussion is a good starting point to play this amazing game

[Guest]

Well, I found that, if the 2 conditions are satisfied, your way that considering them together is better because it is right and easier.

But you should treat the cost of your gas like this:
0.2*20(market price of the oil)+5*0.06(power)+0.15.
Because you can sell the raw materials on the market. I had interpretted it in that post I mentioned above.

Further more, from the mathematics point of view, it is obviously hard to get the same result if I use the market price (after production) while you use the cost (before production). In fact, I though of the problem a little while, finally, I get a nice result.

1,Let's assume "x" is the profit/time by producting gas and sell them on the market:
x = (p-c)/t;
"p" is the market price of gas, "c" is the cost, "t" is the time of production;

2,"y" is the max. profit/time by sell them in gas station:
y = (P*-p)/T[P*];
P* is the optimum sale price, T[P] is the function of sale time in terms of the sale price P;

3,"z" is the general profit/time considering the whole industries in Kapiland.

Then in equilibrium, x=y=z, we can get the p and the P*.

That is my way to explain the whole story of the price determination in the Kapliland. It is logical, because, the demand of any product is finally from the incentives to sell them(or high-end products) to those NPCs.

I hope I didn't make any mistakes.

As for your question, do you forget give me some more information such as the relation of X,Y,Z? Otherwise, there is no conditions. If you just wanna tell me you also product oil, I mentioned it above: nomatter you producted it or bought it, when you product gas, the cost of oil is the market price.

[Guest]

V(% demand satisfied) is based on supply and demand, which in turn are based on population. So all the intangibles you mentioned are covered.

And the formula I named isn't necessarily correct and of course doesn't calculate how much each factor affects sale time, but it is almost certainly roughly how it works.

The 'intangibles' are not covered, because they are unknown. The 'tangibles' might be covered, but these will change hourly. We have no way of knowing how many people are selling what product for how much and where, we have supply/demand and average price, but these do not give all the information needed to create a workable formula.

You admit, your 'formula' isn't necessarily correct, and is only 'roughly' how it works, and I agree, which is why I said your formula is essentially useless in determining an absolute optimal selling price. At best, it is a good guide to determine an approximation, and better than simply guessing at it, but so is my method. Perhaps your method is a little more accurate, but it also consumes an enormous amount of time to find all the data and crunch all the numbers, when you can just look at the stat I suggested and do basically the same thing.

Don't take this the wrong way, it is not meant to be an argument that you are wrong and I am right, and I don't want to indicate that at all. I am only speaking for myself when I say I think it's a waste of time to do spreadsheets and work out rough formulas. If your goal is to sell your products at the best price, you can do this using the customer satisfaction statistics alone, if you understand where the 'optimal' point is for your particular product. It's just a much simpler way to do what you are doing, that is all I am saying.

[Guest]

I never thought this question would receive such a response. This has more replies than any other question ever posted in the questions forum, and probably more real replies than any other post in all the forums (when you exclude "up" posts).

Lol

[Guest]

Ah, but wait... those are not the only variables that determine sales time. You also have population of the given store area, supply of that product, demand for that product, how much is currently being sold of that product, what price it is being sold for (not just an average price, but also mean price) You also have various rates of sale depending on the size of various stores in the area, new companies adding to and compounding the supply rate, people closing stores and lowering the supply rate, as well as lowering the population which lowers demand. Most of these, you simply can't determine, you have no data on it, only the game has this information.

OMG!! i was trying to read this whole discussion and then reply, but i just couldn't, you repeat the same as a parrot and it makes me crazy

please, tell me, what is the difference between "supply of that product" and "how much is currently being sold of that product"

also "new companies adding to and compounding the supply rate" and "people closing stores and lowering the supply rate" is not a new variable, it's just the same supply as before

you don't need to determine whether someone is going to close the shop or build another one, you just take the supply from the stat's and that's it

i will write the rest after reading the whole discussion

[Guest]

to H-B:

you say that you can tell the best price by the number of people that think your price is too high, but there is also the number saying how many people think your quality is too low and the demand/supply percentage

that means, that with the same number of people discontent with your price, you won't sell your products in the same time, if your quality is different or dte percentage changes

so you criticise the formula that takes into consideration much more factors than you do

and also i think that you don't really understand what a "formula" means, a variable can't affect the formula, it can only affect the result, that you will get, there is a formula almost for everything, the only problem is to get reliable variables in it
there is also a formula for weather prediction and the result will be as exact as the information you put in it

you say that it's impossible to find that formula, but it's not IMPOSSIBLE, it's just DIFFICULT, but it's certainly possible, because we all know, that there is such a formula, because this game is based on formulas

and finally to people saying, that it's just a game and we should have fun:

we ARE having fun and THIS is what this game means to us, finding out the best ways to make profit, finding the formulas to make our companies work more efficiently, that is FUN