<p>In practice, the company (manufacturer) usually plans their quantity of product for next year in Q4, based on the remaining capacity and the demand of their clients (including outstanding clients and new orders estimated by their sales staffs).</p>

<p>In general, the company puts high priority for run in line with demand of market, instead of optimizing the cost by mc=mr as in theory.</p>

<p>However, some huge corporations, which have stable and big revenue sufficient to cover cost of  collecting information input for optimizing manufacturing cost, may apply that formular in their operation. I have not worked at such company so far so I do not make sure about that.</p>

CC BY-SA 4.0
2019-04-28T03:38:21.153Z
2019-04-28T03:38:21.153Z
Huynh
<p>I understand the theory behind it but in practice how is this done? </p>

<profit-maximization><marginal>
In the real world, how does a firm know their marginal costs and revenue? How do they mathematically calculate MC=MR?
Daniel Troncoso
# In the real world, how does a firm know their marginal costs and revenue? How do they mathematically calculate MC=MR?

(Asked by: username_0 on 2019-04-27)

I understand the theory behind it but in practice how is this done?

**Tags:** profit-maximization, marginal

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## 1 answers

### Answer by username_1 on 2019-04-28. Score: 0

In practice, the company (manufacturer) usually plans their quantity of product for next year in Q4, based on the remaining capacity and the demand of their clients (including outstanding clients and new orders estimated by their sales staffs).

In general, the company puts high priority for run in line with demand of market, instead of optimizing the cost by mc=mr as in theory.

However, some huge corporations, which have stable and big revenue sufficient to cover cost of collecting information input for optimizing manufacturing cost, may apply that formular in their operation. I have not worked at such company so far so I do not make sure about that.


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