Patent ID: 7438227

Claim:
A method for determining prices and order quantities that maximize a retailer's expected profit for a specific product category of horizontally differentiated products, comprising the steps of: using a computer to determine expected demand for products based on a distribution of upper limits of prices each customer is willing to pay for each of a plurality of products and based on given proposed retail prices; using a computer to determine an amount of products to be ordered by calculating profit based on one or more of available wholesale price data, proposed retail prices, and said determined demand at said proposed retail prices; using a computer to determine retail prices based on available wholesale prices, a distribution of upper limits of prices each customer is willing to pay for given products, wherein said retail prices determined by said computer are profit-maximizing retail prices, and said determined demand for products and said determined order quantities, both depending on said retail prices; and providing a list of quantities and prices as one or more of a printout, a machine-readable data output to storage, and directly as input to data processing.