Research on TOC Accounting Based Decision Making of.pdf

C. Xiong et al. (Eds.): ICIRA 2008, Part II, LNAI 5315, pp. 485–494, 2008. ? Springer-Verlag Berlin Heidelberg 2008 Research on TOC Accounting Based Decision Making of Products Pricing Qiong Liu, Gang Zhou, and Chaoyong Zhang State Key Laboratory of Digital Manufacturing Equipment and Technology, Huazhong University of Science and Technology, Wuhan, Hubei Province, China qiongliuq@ Abstract. In order to help enterprises to make a competitive strategy of price, a TOC accounting based decision making model of products pricing is proposed. A function between sales and prices is taken into account in a product decision- making model for the first time. The function between sales and prices could be yielded by statistical analyzing or forecasting. If an enterprise has much his- torical date on sales and price, BP neural network is adopted to get the function. Otherwise, polynomial fitting method is adopted. Genetic algorithm is adopted to solve the decision making model of products pricing and an optimized price is yielded. The validity of proposed model and algorithm are verified by corre- sponding with case studies. Keywords: TOC accounting; decision making of products pricing; Genetic al- gorithm; Back-Propagation Neural Network，polynomial fitting method. 1 Introduction The product pricing is a very sensitive element. It might affect the sales and profits. The pricing should facilitate both the promotion of sales and making profits. At the same time it should consider the customers’ acceptance. The product pricing is heavily based on the accounting system. Currently there are two major different accounting systems. One is the widely used system, Traditional Accounting method. The other is TOC (Theory of Constrains) Accounting. Some Literatures[1-2] pointed out that in the current business condition Traditional Accounting method might cause corporate making mistakes on decision-making. However TOC accounting is simple and easy to calculate.