Trying to maximize profit?

Here's my dilemma:

I have this market where I can place "buy-orders" which take a certain amount of time to fill with items. Once the "buy-order" is filled I can then place a "sell-order." If I am able to buy the item for cheaper than I can sell it, I can "flip" that certain item.

I am trying to maximize the profit while taking into account demand/time it takes to fill the "buy-order."

My current calculations are:

(#of items bought in 5 minutes)*(sellorder price of one item - buyorder price of one item).

That is technically what I am using to rank all of the different items as to figure out which is most profitable.

I can obtain the values for each variable of the equation. I don't have any power over the variables, they are set in stone.

Say I put a "buyorder" in for 1000 (user chosen) items at $5.00 per. This item is purchased (on average) 250 times per minute (4 minutes to fill buyorder). Then I put a "sellorder" for those 1000 items at $7.00.

(1250)*(7.00-5.00)=2500. 2500 is used as a score in the ranking system deciding which item is BEST to buyorder then sellorder to maximize profit (might not be using profit perfectly correct it could be revenue idk)

What I want to also factor in to that equation is the cost of buying all 1000 items to help score it in the ranking.

Unsure if it is possible.

2 Answers

Relevance
  • Adrian
    Lv 7
    1 month ago

    The biggest unknown is how many of the bought units can you sell? If it takes a month to sell all the units, or a year, that makes a big difference, as current "buy" prices will have changed by then. If you can't sell them all, your calculations will be all wrong.

    Your formulas only work if you can buy and sell everything in the same day (or two)

    • Commenter avatarLog in to reply to the answers
  • 1 month ago

    Instead of (Sell - buy) try (sell-buy)/buy which will give you your profit per dollar investment.

    For example in your example the profit per dollar would be 

    (7-5)/5 or 2/5 or .4 or 40 cents per dollar.

    If you instead had an item that you bought at 10 and sold at 12 although your original equation would still see the 2 dollars gained the new equation would see

    (10-12)/10 or 2/10 or .2 or 20 cents per dollar profit

    This shows that you are getting less profit per dollar spent.

    • Commenter avatarLog in to reply to the answers
Still have questions? Get answers by asking now.