Method and system for determining price markdown schedule

• US 7,912,748 B1
• Filed: 06/01/2006
• Issued: 03/22/2011
• Est. Priority Date: 06/01/2005
• Status: Active Grant

• Current Assignee: SAP AG (SAP SE)
• Original Assignee: SAP AG (SAP SE)
• Inventors: Rosenberg, Adam N., Moore, Jeffrey D.
• Primary Examiner(s): Hayes; John W
• Assistant Examiner(s): NELSON, FREDA ANN
• Application Number:
  US11/421,529
• Time in Patent Office: 1,755 Days
• Field of Search: 705/7, 705/10, 705/28, 705/400
• US Class Current: 705/7.35
• CPC Class Codes: G06Q 10/087 Inventory or stock management, e.g. order filling, procurement or balancing against orders
• CPC Class Codes: G06Q 30/0201 Market modelling; Market analysis; Collecting market data
• CPC Class Codes: G06Q 30/0206 Price or cost determination based on market factors
• CPC Class Codes: G06Q 30/0235 constrained by time limit or expiration date
• CPC Class Codes: G06Q 30/0283 Price estimation or determination
• CPC Class Codes: G06Q 30/06 Buying, selling or leasing transactions

Abstract

Markdown optimization may be performed using a computer system. Markdown objectives may include margin maximization or inventor minimization. Markdown schedule optimization uses an efficient, iterative, targeted combinatorial search. First, permissible discount steps are identified, then for each permissible discount step, a subspace of permissible step dates is identified. Elements from the date step subspace and price reduction subspace are combined and evaluated against the markdown objectives. If an improved markdown schedule is located, a new subspace of permissible step dates is defined to search the subregion of the solution space where the improved markdown optimization schedule was identified. Scheduling of inventory allocation from a distribution center is also disclosed.

Claims

1. A computer-implemented method of markdown schedule optimization comprising:

identifying a measurable markdown objective;

identifying a scheduling group including at least one product and at least one store;

calculating allocation of inventory from a distribution center to a store in the scheduling group;

determining a schedule of price reductions for the scheduling group, the schedule of price reductions indicating degrees and times of reductions in price in the scheduling group, wherein the determining of the schedule of price reductions is performed using a processor of a computer and further comprises;

selecting a permissible markdown price step from a group of permissible price steps;

providing a convergence criterion with respect to the measurable markdown objective;

defining a first subspace of permissible markdown times for implementing the permissible markdown price step;

identifying a preferable permissible markdown time for implementing the permissible markdown price step;

evaluating a markdown schedule comprising the preferable permissible markdown time and the permissible markdown price step to determine that the convergence criterion is not met; and

based on the convergence criterion not being met, defining a second subspace of permissible markdown times for implementing the permissible markdown price step, updating the markdown schedule using the second subspace, and evaluating the updated markdown schedule;

calculating forecasts from optimized markdown and model parameters; and

outputting results including the updated markdown schedule.

2. The method according to claim 1 wherein the measurable markdown objective seeks reduction in inventory.

3. The computer-implemented method according to claim 1 wherein the measurable markdown objective seeks increase in margin.

4. The computer implemented method according to claim 1 wherein the schedule of price reductions is updated during the markdown based on information collected during the markdown.

5. The computer implemented method according to claim 1 wherein the schedule of price reductions is based on sales data for individual product lines.

6. The computer-implemented method of claim 1, wherein:

the convergence criterion is representative of an observance of no improvement in the updated markdown schedule.

7. A computer-implemented method of updating a markdown schedule, the method comprising:

identifying a scheduling group including at least one product and at least one store;

determining an initial schedule of price reductions for the scheduling group, the initial schedule of price reductions indicating degrees and times of reductions in price in the scheduling group;

implementing the initial schedule of price reductions in the scheduling group;

collecting markdown sales information about sales in the scheduling group after implementing the initial schedule of price reductions;

updating the initial schedule of price reductions to determine a second schedule of price reductions, the updating of the initial schedule of price reductions being performed using a processor of a computer and further comprising;

selecting a permissible markdown price step from the group of permissible price steps;

providing a convergence criterion that defines a sufficiently optimized markdown schedule;

defining a first subspace of permissible markdown times for implementing the permissible markdown price step;

identifying a preferable permissible markdown time for implementing the permissible markdown price step;

evaluating a markdown schedule comprising the preferable permissible markdown time and the permissible markdown price step to determine that the convergence criterion is not met, and based on the convergence criterion not being met, defining a second subspace of permissible markdown times for implementing the permissible markdown price step, updating the markdown schedule using the second subspace, and evaluating the updated markdown schedule; and

outputting results including the updated markdown schedule.

8. The computer-implemented method of claim 7, wherein:

the convergence criterion is representative of an observance of no improvement in the updated markdown schedule.

9. A computer-implemented method of determining a schedule of reductions in prices, the method comprising:

identifying a scheduling group including at least one product and at least one store,

determining an expected optimized schedule of price reductions for the scheduling group, the expected optimized schedule of price reductions indicating degrees and times of reductions in price in the scheduling group, the determining of the expected optimized schedule being performed using a processor of a computer;

identifying an intermediate markdown time;

determining an actual schedule of price reductions such that the price of a product in the scheduling group at the intermediate markdown time is higher under the actual schedule of price reductions than under the expected optimized schedule of price reductions;

evaluating sales at the intermediate markdown time, the evaluating of the sales being based on a determination that a convergence criterion is not met; and

determining an updated schedule of price reductions based on the evaluating of the sales at the intermediate markdown time.

10. The computer-implemented method of claim 9, wherein:

the convergence criterion is representative of an observance of no improvement in the sales under evaluation at the intermediate markdown time.

11. A non-transitory markdown schedule optimization computer program product to update a markdown schedule, the markdown schedule optimization computer program product comprising:

a computer usable medium and computer readable program code embedded on the computer readable medium, the computer readable program code comprising;

computer code to identify a scheduling group including at least one product and at least one store;

computer code to determine an expected optimized schedule of price reductions for the scheduling group, the expected optimized schedule of price reductions indicating degrees and times of reductions in price in the scheduling group;

computer code to determine an intermediate markdown time;

computer code to determine an actual schedule of price reductions such that the price of a product in the scheduling group at the intermediate markdown time is higher under the actual schedule of price reductions than under the expected optimized schedule of price reductions;

computer code to evaluate sales at the intermediate markdown time, the evaluating of the sales being based on a determination that a convergence criterion is not met; and

computer code to determine an updated schedule of price reductions based on the evaluating of the sales at the intermediate markdown time.

12. The markdown schedule optimization computer program product of claim 11, wherein:

the convergence criterion is representative of an observance of no improvement in the sales under evaluation at the intermediate markdown time.