Retail Predictive Application Server (MOSC)

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Deprice Formula using Elasticity

edited May 20, 2016 11:21AM in Retail Predictive Application Server (MOSC) 8 commentsAnswered

In RDF Preprocessing, there is a Step to do De Price (method no 22). The formula given for Deprice is

Smoothed = original * (price/maxprice) ^2

This is very similar to using the formula for price elasticity using an elasticity of 2 to come up with the new Volume. On what basis is the value "2" used? Are we assuming that the Deprice is always done with a elasticity of 2?

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