The effect of price elasticity on firm profitability: A simulation application in the food industry

In today's conditions where continuous growth and development is in question and global competition intensifies, it is necessary to produce quality products, to work with high efficiency, to reduce costs, to increase profits, etc. in order for businesses to gain a place, protect and develop the place they have acquired has goals. It is very important to make a good production planning in order to achieve all these goals. Production planning represents a problem that needs to be solved for companies as it expresses a process that needs to be decided for cost minimization and profit maximization. Production planning is an action in which resources and constraints are determined and different parameters such as costs are estimated. However, the size and complexity of the problem is increasing day by day in today's conditions and current analytical methods are insufficient in problem solving. The production plan to be prepared should have a structure that includes all the relationships between the variables in cases where uncertainty and randomness are at the forefront. For this purpose, one of the production planning techniques to be recommended to businesses is simulation. In this direction, the aim of the study is to analyze scenarios in production processes by using simulation technique, to examine the effect of flexibility in sales prices on profitability, and to create a structure for future production planning. For this purpose, in the study, production planning and simulation technique is explained and a structure is presented to calculate the profit amounts obtained under different situations and to create alternative production plans by using the data of a company that produces fruit juice concentrate.