Apparatus and method for selective merchandise price optimization

• US 7,249,033 B1
• Filed: 11/30/2001
• Issued: 07/24/2007
• Est. Priority Date: 11/30/2001
• Status: Active Grant

• Current Assignee: Acoustic, L.P.
• Original Assignee: DemandTec Inc. (International Business Machines Corporation)
• Inventors: Neal, Michael, Parkin, Rob, Valentine, Suzanne, Venkatraman, Krishna, Close, John, Delurgio, Phil, Lee, Hau
• Primary Examiner(s): Hayes, John W.
• Assistant Examiner(s): Jabr, Fadey S.
• Application Number:
  US09/999,079
• Time in Patent Office: 2,062 Days
• Field of Search: 705/1, 705/400, 705/10
• US Class Current: 705/7.35
• CPC Class Codes: G06Q 10/063 Operations research, analysis or management
• CPC Class Codes: G06Q 30/02 Marketing; Price estimation or determination; Fundraising
• CPC Class Codes: G06Q 30/0206 Price or cost determination based on market factors
• CPC Class Codes: G06Q 30/0283 Price estimation or determination

Abstract

An apparatus is provided for determining optimum prices of products for sale. The apparatus includes a scenario/results processor through which a user prescribes an optimization scenario, and through which optimum prices are presented to the user. The optimum prices are determined by execution of the optimization scenario, where the optimum prices are determined based upon estimated product demand and calculated activity based costs. The scenario/results processor has an input/output processor and a scenario controller. The input/output processor acquires data corresponding to the optimization scenario from the user, and distributes optimization results to the user. The scenario controller is coupled to the input/output processor. The scenario controller controls acquisition of the data and the distribution of the optimization results in accordance with a price optimization procedure. The price optimization procedure enables the user to selectively prescribe the subset of the products for sale.

Claims

1. An apparatus for determining optimum prices of products for sale, comprising:

a scenario/results processor, configured to enable a user to prescribe an optimization scenario, and configured to present the optimum prices to said user, wherein the optimum prices are determined by execution of said optimization scenario by an optimization engine coupled to said scenario/results processor, and wherein said optimum prices are determined based upon product demand estimated by said optimization engine and calculated activity based costs, and wherein said optimum prices are determined for a subset of the products for sale, said scenario/results processor comprising;

an input/output processor, configured to acquire data corresponding to said optimization scenario from said user, and configured to distribute optimization results to said user; and

a scenario controller, coupled to said input/output processor, configured to control acquisition of said data and distribution of said optimization results in accordance with a price optimization procedure, wherein said price optimization procedure enables said user to selectively prescribe said subset of the products for sale, and wherein said scenario controller enables said user to prescribe and prioritize rules for said optimization scenario, and wherein lower priority rules that contribute to a conflict are progressively relaxed up to a limit in order to render execution of said optimization scenario feasible.

2. The apparatus as recited in claim 1, wherein said data is acquired from said user over the Internet via a packet-switched protocol.

3. The apparatus as recited in claim 2, wherein said data is acquired from a source electronic file and said optimization results are distributed to a destination electronic file, said electronic files being designated by said user.

4. The apparatus as recited in claim 1, wherein said input/output processor comprises:

a template controller, configured to provide first price optimization templates and second price optimization templates, wherein said price optimization templates are presented to said user to allow for prescription of said optimization scenario, and for distribution of said optimization results; and

a command interpreter;

configured to extract commands from said first price optimization templates executed by said user, and configured to populate said second price optimization templates according to result data provided for presentation to said user.

5. The apparatus as recited in claim 4, wherein said first and second price optimization templates are provided according to hypertext markup language (HTML).

6. The apparatus as recited in claim 4, wherein said first and second price optimization templates are provided according to extensible markup language (XML).

7. The apparatus as recited in claim 4, wherein said first and second price optimization templates are provided as Java applets.

8. The apparatus as recited in claim 4, wherein said first price optimization templates comprise:

a plurality of new scenario templates, configured to enable said user to prescribe scenario parameters corresponding to said optimization scenario.

9. The apparatus as recited in claim 8, wherein said plurality of new scenario templates comprises:

a category template, for specifying a product category for price optimization, said product category comprising;

a plurality of demand groups, each of said plurality of demand groups configured to categorize a set of highly correlated products.

10. The apparatus as recited in claim 9, wherein said plurality of new scenario templates further comprises:

a products template, for specifying the products for sale, wherein the products for sale span more than one of said plurality of demand groups.

11. The apparatus as recited in claim 9, wherein said plurality of new scenario templates further comprises:

a locations template, for specifying a plurality of store groups for which the optimum prices are to be determined, wherein, when determining the optimum prices, the apparatus employs portions of said data that correspond to said plurality of store groups.

12. The apparatus as recited in claim 9, wherein said plurality of new scenario templates further comprises:

a time horizon template, for specifying a time period for which the optimum prices are to be determined.

13. The apparatus as recited in claim 9, wherein said plurality of new scenario templates further comprises:

an at-large rules template, for specifying and prioritizing said rules to govern determination of the optimum prices, said rules comprising;

maximum allowable price swing for each of the products for sale; and

maximum allowable swing for average price of each demand group within said plurality of demand groups.

14. The apparatus as recited in claim 9, wherein said plurality of new scenario templates further comprises:

a strategy template, for specifying a merchandising performance figure of merit, and for specifying limits for changes in sales volume.

15. The apparatus as recited in claim 14, wherein options for specification of said merchandising performance figure of merit comprise net profit, said sales volume, and revenue.

16. The apparatus as recited in claim 8, wherein said first price optimization templates further comprise:

a subset re-optimization template, configured to enable said user to prescribe said subset of the products for sale, thereby limiting the number of price changes to be determined by execution of said optimization scenario.

17. The apparatus as recited in claim 4, wherein said second price optimization templates comprise:

a price optimization results template, for providing said user with said result data corresponding to said optimization scenario.

18. The apparatus as recited in claim 17, wherein said result data comprises optimized values and percent change values for merchandising factors, wherein said merchandising factors comprise one or more of the following:

volume, revenue, product cost, gross margin, and net profit.