Department of Mathematics

ACO hardware

Proposed Project for the MSU Industrial Math Students

Developing a “Retail Inflation Pricing Strategy” for Periods of Rapid Inflation.

Develop a “Retail Inflation Pricing Strategy” for periods of rapid inflation driven by increased competition for natural resources and shortages in commodities. The inflation driven by oil prices will affect everything from product packaging to the simple necessities as garbage bags and plastic containers. All these factors affect the retail prices of on the shelf retail products and change the way consumers spend their disposable and necessity purchases. Rising food prices also affect everyday basic decisions of how money is spent.

This is an exciting project to apply mathematical and analytical skills to create a strategy for product pricing that anticipates cost increases based on the rapid rise in competition for raw materials, declining value of the American dollar, and the impact on the American Consumer when it comes to purchasing “Hardware Store Basics”. This includes Traditional hardware items, low cost food staples and discretionary lawn & garden, painting and household items based on actual real life data from multiple sources and markets.

The goal would be to identify and quantify a pricing strategy that will allow ACO to remain financially strong and priced competitively in the market place, while maintaining and adding to our bottom line profit. Having the correct price increases at the right time to guarantee continued profitability while calculating consumer changes in spending power and disposable income into the final comprehensive strategy. This project would include ways to predict cost increase percentages based on raw material cost increases, the impact of personal transportation cost to spendable income and how this will affect the consumer. The project would also evaluate and quantify the point when it is no longer cost effective to import a product compared to purchasing domestically when escalating transportation costs come into play.

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