Financial model engine

• US 7,657,470 B1
• Filed: 12/20/2000
• Issued: 02/02/2010
• Est. Priority Date: 12/20/2000
• Status: Active Grant

• Current Assignee: Acoustic, L.P.
• Original Assignee: DemandTec Inc. (International Business Machines Corporation)
• Inventors: Venkatraman, Krishna, Lee, Hau, Delurgio, Phil, Neal, Michael, Valentine, Suzanne
• Primary Examiner(s): Colbert; Ella
• Application Number:
  US09/741,957
• Time in Patent Office: 3,331 Days
• Field of Search: 705/1, 705/5, 705/8, 705/10, 705/29, 705/30, 705/35, 705/36, 705/400, 705/4, 705/6, 705/26, 705/27, 705/28, 345/440
• US Class Current: 705/35
• CPC Class Codes: G06Q 10/04 Forecasting or optimisation specially adapted for administrative or management purposes, e.g. linear programming or "cutting stock problem" market predictions or forecasting for commercial activities G06Q30/0202
• CPC Class Codes: G06Q 10/06375 Prediction of business process outcome or impact based on a proposed change
• CPC Class Codes: G06Q 10/087 Inventory or stock management, e.g. order filling, procurement or balancing against orders
• CPC Class Codes: G06Q 30/02 Marketing; Price estimation or determination; Fundraising
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes

Abstract

A method for modeling cost is provided. Sales data is received. Cost data is also received. Cost per unit of product is estimated from the sales data and the cost data. In addition, an apparatus for modeling costs, useful in association with an optimization engine, is provided. Generally, an econometric engine for receiving sales data, cleaning the data and generating imputed variables is combined with a financial engine for receiving imputed variables from the econometric engine, receiving cost data, generating a cost model, and outputting the cost model to the optimization engine.

Claims

1. An apparatus for modeling costs, in association with an optimization engine and at least one merchandise store coupled to the apparatus via a network, wherein the at least one merchandise store includes at least one of a brick-and-mortar store, an online store, and a catalog store, and wherein the optimization engine is configured to receive input from the apparatus, and wherein the optimization engine is further configured to generate a preferred set of prices, the apparatus comprising:

an econometric engine implemented by a computer for receiving sales data from at least one merchandise store via the network, cleansing the sales data and generating imputed variables by imputing at least one missing data point; and

a financial engine implemented by the computer for receiving imputed variables from the econometric engine, receiving cost data from at least one merchandise store via the network, generating a cost model for at least one product, and outputting the cost model to the optimization engine, wherein the cost model models costs of the at least one product given the merchandise store, a demand group and a selected time period, and wherein the demand group is a group of highly substitutable products.

2. The apparatus, as recited in claim 1, wherein the financial engine estimates inventory space in the at least one merchandise store used by a product from the sales data and delivery data.

3. The apparatus, as recited in claim 1, wherein the imputed variables include at least one of a seasonality variable, a promotional variable and a cross-elasticity variable.

4. The apparatus, as recited in claim 3, wherein the cost model includes fixed costs and variable costs, further wherein the variable costs are a function of the amount of sales of the product and the fixed costs are not a function of the amount of sales of the product.

5. The apparatus, as recited in claim 4, wherein the cost model models costs for at least one merchandise store.

6. The apparatus, as recited in claim 5, wherein the cost model models costs as the sum of a bag cost, a location inventory cost, a checkout labor cost, a location receiving cost, a transportation cost, a distribution center inventory cost, a distribution center labor cost, an invoice processing cost, a location space cost, and a distribution center space cost.

7. The apparatus, as recited in claim 5, wherein the econometric engine is coupled to a coefficient estimator, wherein the coefficient estimator generates a combined product sales model, a share model and a sales model.

8. The apparatus, as recited in claim 7, wherein the coefficient estimator outputs the combined product sales model to the optimization engine, and wherein the optimization engine generates optimized pricing for the products from the combined product sales model and cost model.

9. The apparatus, as recited in claim 7, wherein the coefficient estimator receives imputed variables from the econometric engine and sales data from the at least one merchandise store.

10. The apparatus, as recited in claim 9, wherein the combined product sales model is given by:

{circumflex over (D)}_i,k,t={circumflex over (F)}_i,k,tŜ

_i,t

where,

k=a product

i=a primary demand group

t=a time period

D_i,k,t=a demand for product k in demand group i in time period t

F_i,k,t=a fraction of the demand group i equivalent sales comprised by the product k in the time period t

S_i,t=an equivalent sales of the demand group i in the period t.

11. The apparatus, as recited in claim 9, wherein the sales model is given by:

12. The apparatus, as recited in claim 9, wherein the share model is given by:

13. The apparatus, as recited in claim 7, wherein the coefficient estimator is a computer readable medium that has computer code thereon for performing computer implemented operations.

14. The apparatus, as recited in claim 1, wherein the econometric engine is a computer readable medium that has computer code thereon for performing computer implemented operations.

15. The apparatus, as recited in claim 1, wherein the financial engine is a computer readable medium that has computer code thereon for performing computer implemented operations.