Re: Cause and Effect Reversed?

["Leif Svalgaard" <leif@xxxxxxxx>]

> >I think we are converging here. My real gripe was with Pete's statement
> >that the pricing formula determines the size of your production run, I
think
> >this is backwards at least when applied to the AS/400. I don't think
> >the argument can be made that:  "I'm not going to sell you one, because
> >doing so does not maximize my profit".
>
> That's not my point at all. If you have the correct price function, you
> will run out of customers at precisely the same time you run out of
> product. The price point determines the number of units that you will sell
> because it determines how many customers will want it, and you will have
> employed the algorithm to determine what that price point should be in
> order to maximize your profit. If you run out of product while there is
> still demand, or you end up with excess inventory, then you do not have the
> correct price/sales-volume correlation.

Pete, don't you see that your argument is circular?
You define the correct correlation as the one that makes
the formula come out right.

Probably you won't see it so what's the use of
belaboring the point?



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