Marginal Optimization

kenneth collins kenneth.p.collins at worldnet.att.net
Fri May 6 01:21:21 EST 2005


--- Anti-under-utilization ---

I started-out 'thinking' that I was on
to something "hot", but've reconsidered.

Turns out it's just more of my usual
"Lament".

But I'll post it, anyway -- for those
who're obsessed with "getting-inside
my head" :-]

I've taken-up a casual study of Lin-
ear Programming, and, while doing
so, the combination of the Problem
that prompted me to take-up this
study, and certain circumstances
that permeate the Poverty in which
I exist "melded", in the light of the
stuff in the refs I was studying.

There's a Huge-Problem that oc-
curs ubiquitously within all facets
of Human endeavor. It shows itself
in the form of resources that're large-
ly-underused.

For instance, folks probably have
had the experience of going to the
Movies to catch the early show on
their days off from work, getting a
discount on the ticket price, but
finding the concession prices the
same as always, so, wanting to econ-
omize, one forgoes a "treat", enters
the theater where the movie one is to
see is showing, only to find one's self
sitting alone.

>From the perspective of the Theater,
this isn't good enough.

1. The ticket-pricing isn't flexible
enough, and 2. the concession stand
is just sitting-there, as a negative as-
set.

So the idea is to Optimize Margins
by using modern computer algorithms
to set ticket prices and concession
prices to levels that're more-inviting
to the Consumer.

Five Patrons @ $3.00 gives the thea-
ter a better return than does one or
two Patrons @ $7.00.

And, say, concessions were priced
in an analogous way -- of course,
never selling them for less than cost -- 
it'd be less-likely that Patrons would
forgo "treats", so the concessions
would go from being a negative as-
set to a positive one. =Something= is
better than =less-than-nothing=.

Another example: Flex-pricing on
Newspapers -- as the day wears-on,
they get less-expensive. No "returns"
hassles.

This sort of thing would require a new
generation of computer hardware -- 
auto-balancing of all accounts, con-
nected-back to the vendor in real-
'time'. [With respect to Newspapers,
this'd also provide information that's
useful to the Publishers. You know -- 
real-'time' info about the stories folks're
interested in purchasing newspapers to
read about, etc.]

Get it?

Where the Sociology comes into the
picture is that [Trust me, I know about
what I'll discuss :-] folks who live in
Poverty just cannot afford to participate
in things like movies -- so they do not
experience the lessons that =can= be
[even if that's not always the case] ex-
perienced by folks who addend the
movies. They also don't experience the
socializing effects of =Participating= in
a collective endeavor ["going to the
movies" with strangers who just want
to enjoy the show].

So, since the theater's physical plant
is being under-utilized, why not set
ticket and concession prices more-
flexibly?

Prices can be scheduled on a per cent
of capacity basis, a 'time'-experience
basis, or whatever.

Where the computers come into the pic-
ture is in the long-term optimization
of pricing, and with respect to stuff
like bar-coding of tickets so that con-
cession prices are automatically set
to coincide with ticket prices.

The result will be pricing-schedules
that are attractive to folks who'd not,
otherwise, be able to participate in
the movie experience , and a net
Profit-increase for the theater.

Win-win.

But the Marginal Optimization oppor-
tunities don't end at the theater.

Anywhere there're under-utilized re-
sources, the same mechanisms will
work -- say, in Academia. Alterna-
tive classroom scheduling can be of-
ferred to Impoverished Students, at
a discount, if they agree to attend
classes during hours during which
classroom space is going unused.
There'll be no problem finding folks
who want to take advantage of the
correlated Teaching opportunities.
[Trust me -- I'd Teach at 3:00am
if any place'd allow me to do so,
for a salary that would be coupled
to my class-enrollment.]

This sort of thing would allow Im-
poverished folks to receive higher
Education, give Young Teachers the
Opportunity to gain experience, ex-
tend the scope of course offerings, and
decrease the under-utilization of the
physical plant.

At first, it seems that "it won't work"
in an Academic setting because, af-
ter all, who wants to learn at 3:00am?
And who wants to Teach at that hour?

The Student who cannot, otherwise,
Study, and the Teacher who can-
not, otherwise, Teach.

The "inducement" is the relative-savings.

There'll still be Students and Teachers
enough to fill the 'normal' classroom
hours. And all you want to do is eliminate
the total-Waste of unused facilities.

But, for impoverished folks, there's no
"other way" -- which is the main reason
that "dispair" pre-empts their even con-
sidering higher Education.

The pay-off for the College or University
is that it is turning a negative asset into
a a break-even [or positive] one.

And the Service to Society would be
Immense -- the instantiation of Hope
where, just because of Poverty, there
formerly was none.

'Course, it'd be an "adjustment" within
the spectrum of "the way things are
supposed to be" in Academia.

The idea can pretty-much be applied
to anything -- because it's always
better to get =some= return from a
physical plant than to have that physical
plant draining "the bottom line" during
off-hours.

Yes, it requires some 'vigilance', but
such can be greatly-assisted by modern
use of computers.

What I have in-mind would be contract-
ing at attractive prices to 3rd-World
Nations -- creating markets that would
not, otherwise, be there, =not= to Profit,
but to eliminate the Waste of under-utiliza-
tion of physical plants.

A side-benefit would be that this sort
of thing would augment the flow of
Trainees into workforces. The folks
who took Jobs during the plant-utiliz-
ation-augmentation shifts would work
at lower wages in return for their gain-
ing experience.

And, see? Eliminating the Waste of under-
utilization would allow the resources that
would've been so Wasted to go into the
manufacture of "luxury" products, which
would be purchased by folks who can
afford them -- so "the high-end" would
get higher, too.

Win-win.

And, because more folks'd be working,
whole economies would become more
energetic. Folks'd climb-up out of Pov-
erty, skilled-Labor forces would be as-
sured, overall Profits would increase,
and so would Tax Revenues.

There're aother elements of this Marginal
Optimization that I lack the necessary
experience to explore. But I'll explore
them anyway :-]

What good is an empty Automobile
Sowroom. It's only sucking-Payroll,
no?

So why not =Use= those hours by
using the flexible-pricing scheduling
that I've been discussing to sell Prod-
uct at a break-even price -- so the
Sowrooms =never= suck-Payroll?

Would this hurt higher-end Sales?

I can't answer that Q., and I under-
stand that it's an =IMPORTANT=
one.

My experience leads me to doubt it,
though -- I'm driving a 14-'year'-old
car because I can't afford to replace
it. Make it possible for me to afford
a new car, and I'll purchase one.

It's the same with any product.

But what would stop a purchasing
agent from a fleet-owning company
from buying at the Marginal-Optimiz-
ation price [thus reducing overall
Profits]?

In manufacturing, what is the equivalent
of the "empty theater"?

Vehicles that the fleet-manager doesn't
want to purchase.

Specialize in these during the Show-
room under-utilization hours?

"Good, Safe, Basic transportation."

The Rich folks want more than that.

But I see a flaw.

There'd be a negative-"cache" in
driving one of the "schedule-filling"
cars.

To me, it'd make no difference. I'd
just be happy to have a car that I
couldn't, otherwise, afford. Just like
I'd be happy to be able to see a movie
that I couldn't, otherwise, see.

And, all the while, the Worthy-goal
of genuine =Participation= would be
fostered.

You know -- instead of "forgetting
about" Impoverished folks. You know -- 
instead of Impoverished folks always
being treated as it they "don't exist"
as far as "Sellers" are concerned -- 
because they have so little to "spend".

What I'm actually getting-at is the
underpinning "Socialization"-Stuff -- 
inviting folks to "roll-up-their-sleeves"
and join-in taking-Responsibility for
the social-welfare of Societies.

I'll say it more-Bluntly.

Business has been "shooting-itself-
in-the-foot" by not taking-actions,
that it =can= take, to foster =Parti-
cipation= within Society.

You know?

Folks =Learn= the ins and outs of
Participating in Societies' Sustinances
through experience.

If Business "thumbs its nose" at Im-
poverished folks, those folks never
learn to Participate -- never learn
what's expected of them, so they
never become able to Participate.

There has to be a way to cover the
costs that'd, otherwise go to Waste,
by strategically-flexible pricing, like
I discussed in the Theater example.

You know -- plug the under-util-
ization hemorrahaging, by pricing
on flexible schedules which take
the =whole= sales-chain into
account, not just this or that factory.

You know? The Showroom "down-
hours" require tthe Dealer to over-
compensate peak-hour prices.

What I'm saying is that there's a
Consumer who is willing to "jump
through hoops" that your routinely-
targeted Consumers are unwilling
to deal with.

Work it out.

Find ways to enable Impoverished
folks to Participate.

The old models of doing 'bsiness'
are Obsolete because they don't
foster "Participation".

Business must, itself, =Participate=
in Making "Societies" Happen.

Folks in Business know better than
me what they can do.

Just ponder the thought that, if there's
no one there, a Business is going-
backward.

Spend some energy working on
eliminating that Waste.

Keep the Impoverished in-mind
while you're working on the Problem.

They're untapped Consumers.

=Do NOT= Prey upon them.

Seek to offer them Genuine Oppor-
tunities =ONLY=. [They've already
accumulated great Expertise with
'respect' to being Preyed-upon, and
they'll only 'move away from' more
Predation.] Offer them what they
cannot, otherwise, attain.

But how does one prevent the Jack-
asses from Preying-upon your wanting
to "Participate" in lifting your Societies
up?

I think what this sort of thing'll take -- 
what'll make it work -- is a generalized
Educational effort. And, with that, I'm
right back at the Need to Communicate
NDT's understanding.

As things stand, everybody's 'pretend-
ing'. No one wants to drive a make-do
car because, in doing so, one admits
one's 'status'. And non-Impoverished
folks are Merciless with 'respect' to
Impoverished folks.

But there has to be a way -- because
I know I'd go to an off-hour movie,
and buy a popcorn, if I knew I could
purchase them for three bucks instead
of ten. And there're other folks like me,
and we'd fill the Theaters beyond the
under-utilization point. And the Rich
folks wouldn't bother with the oppor-
tunity that's attractive to Impoverished
folks.

It remains Capitalism -- Capitalism
that lifts itself up out of what'd, other-
wise, be Waste.

But it's different.

Say, at a place like Walmart -- computer-
ized discounts based on shopping-hour,
brings more folks into the store during
those hours.

Or a supermarket, for that matter -- off-
hour shoppers get x% discount, where
x = facility & staff costs + the optimum
margin that's necessary to bring-folks-
in.

Something is better than less-than-no-
thing.

Would this flex-pricing diminish over-
all Profits -- because even the Rich
folks'd go shopping during off-hours?
So they could be even Richer :-]

Perhaps "movies" don't translate to
"cars", 'retail' and groceries?

Not without generalized-Conscious-
ness-raising, anyway.

Seems NDT's stuff has to come-first.

So that the Jackasses'll know the
Costs in their Jackassnesses, and
Choose otherwise.

There's at least a decent plot for a
comedy-movie in what I've written.
Build the premise, then have a frantic
"customer" be the person to forces
the per-capita pricing schedule to
elevate :-]

Maybe I'm just "anive" -- because
I've always thought the thing to do
is, if you can do it while staying-Alive,
just do it.

It's Interesting, though, to contemplate
what =could= be, in light of what is,
and to Study why it isn't.

It usually comes down to "greed" de-
feating-everything else.

And that's Sorrowfully-'hilarious', be-
cause one always sees, clearly, that
"what is" is always enormously-less
than "what can be".

The "comedy" isn't hypothetical.

Any Genuine effort must carry pop-
ulations on its back.

It's Funny :-]

Still, if I were in Business, I'd tirelessly
search for ways to not let the cash-flow
run-backward. Sell good-but-plain-stuff
Cheap, on an optimized, flexible-pricing
schedule.

Observer: That's why you'd never make
it in business, Ken.

Yeah, I found that out during my brief
stint as a "Balloon Salesman" on Cape
Cod. Ended-up giving the balloons
away  :-]

The thing is, though, is that computers just
aren't being used in all the ways that they
can be used -- as above, to "optimize"
seller-buyer goodness-of-fit, flexibly.
Rich folks don't want to be bothered.

Impoverished folks want the Opportunity
to Participate.

There's more than one kind of Waste
in-the-middle.

Why not eliminate it?

k. p. collins






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