Demand optimization: Difference between revisions
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'''Demand optimization''' is the application of processes and tools to maximize return on sales. This usually involves the application of mathematical modeling techniques using computer software. | {{Short description|Application of processes and tools to maximize return on sales}} | ||
'''Demand optimization''' is the application of processes and tools to maximize return on sales. This usually involves the application of mathematical modeling techniques using computer software.<ref>{{Cite web |last=Burke |first=James |date=March 29, 2010 |title=What is Optimization? |url=https://sites.math.washington.edu/~burke/crs/515/notes/nt_1.pdf |publisher=University of Washington}}</ref> | |||
It has particular '''applications''' in [[Finance:Retail|retail]], where merchants wish to identify the best combination of [[Finance:Price|price]] and promotion to achieve desired sales, [[Finance:Gross margin|gross margin]], inventory or [[Finance:Market share|market share]] objectives. | It has particular '''applications''' in [[Finance:Retail|retail]], where merchants wish to identify the best combination of [[Finance:Price|price]] and promotion to achieve desired sales, [[Finance:Gross margin|gross margin]], inventory or [[Finance:Market share|market share]] objectives. | ||
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*[[Social:Yield management|Yield management]] | *[[Social:Yield management|Yield management]] | ||
*[[Finance:Price discrimination|Price discrimination]] | *[[Finance:Price discrimination|Price discrimination]] | ||
==References== | |||
{{Reflist}} | |||
{{DEFAULTSORT:Demand Optimization}} | {{DEFAULTSORT:Demand Optimization}} | ||
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[[Category:Mathematical optimization in business]] | [[Category:Mathematical optimization in business]] | ||
{{Sourceattribution|Demand optimization | {{Sourceattribution|Demand optimization}} | ||
Latest revision as of 02:36, 14 May 2026
Demand optimization is the application of processes and tools to maximize return on sales. This usually involves the application of mathematical modeling techniques using computer software.[1]
It has particular applications in retail, where merchants wish to identify the best combination of price and promotion to achieve desired sales, gross margin, inventory or market share objectives.
The methods used are similar to those applied in the related field of supply chain optimization, where mathematical algorithms are applied to large databases of sales data to help predict future outcomes. In the case of demand optimization, as well as in house sales history, there may be competitive pricing information.
Because it is still a new field, authoritative data on the benefits of demand optimization is not widely available, although suppliers offer case studies of early adopters which claim rapid return on investment, especially in the optimization of the timing and level of price markdowns.
See also
- Demand shortfall
- Price
- Profit maximization
- Yield management
- Price discrimination
References
- ↑ Burke, James (March 29, 2010). "What is Optimization?". University of Washington. https://sites.math.washington.edu/~burke/crs/515/notes/nt_1.pdf.
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