System and method for markdown optimization

• US 8,000,996 B1
• Filed: 11/08/2007
• Issued: 08/16/2011
• Est. Priority Date: 04/10/2007
• Status: Active Grant

• Current Assignee: SAS Institute Incorporated
• Original Assignee: SAS Institute Incorporated
• Inventors: Yao, Xiaodong, Sanli, Tugrul
• Primary Examiner(s): Kramer; James
• Assistant Examiner(s): Wong; Eric T
• Application Number:
  US11/937,103
• Time in Patent Office: 1,377 Days
• Field of Search: 705/7, 705/7.35
• US Class Current: 705/7.35
• 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

Abstract

Computer-implemented systems and methods for identifying markdown prices for items. As an example, a system and method can include identifying for each item an optimal markdown plan containing a markdown price for the item. Also, the method and system can be configured to identify for each item an optimal delay plan. For each item, a delay cost and a markdown spend are calculated, and a comparison is performed of the item'"'"'s delay cost with respect to the item'"'"'s markdown spend. The comparison is used to determine whether to mark down an item based upon the item'"'"'s determined markdown price.

Claims

1. A computer-implemented method for identifying an item to be marked down, comprising:

determining, using one or more processors, an optimal markdown plan for each item in a pool of items, wherein the optimal markdown plan maximizes revenue when an item is marked down during a first budget period;

determining, using the one or more processors, an optimal delay plan for each item, wherein the optimal delay plan maximizes revenue when an item is marked down during a second budget period that is subsequent to the first budget period;

calculating, using the one or more processors, a delay cost for each item using a difference between the optimal markdown plan maximized revenue and the delayed markdown plan maximized revenue;

determining, using the one or more processors, a markdown spend for each item using the optimal markdown plan;

determining, using the one or more processors, a delay efficiency metric for each item using the delay cost and the markdown spend; and

identifying, using the one or more processors, an item in the pool of items to be marked down using the delay efficiency metric.

2. The method of claim 1, wherein the pool of items contains products or services.

3. The method of claim 1, wherein the optimal markdown plan maximizes revenue while satisfying one or more business rules.

4. The method of claim 3, wherein the one or more business rules include limits on item discount amounts, limits on frequency of discounts, limits on dates of discounts, or limits on available markdown budget.

5. The method of claim 1, wherein the second budget period is a next budget period after the first budget period.

6. The method of claim 1, wherein an item hierarchy contains the items from the pool of items, and wherein a location hierarchy contains locations associated with the items from the pool of items.

7. The method of claim 1, wherein the delay efficiency metric is a ratio of the delay cost to the markdown spend, and wherein the pool of products are sorted based upon the delay efficiency metric.

8. The method of claim 1, wherein the identified item is marked down for an item clearance period.

9. The method of claim 1, wherein the identified product is included in a price schedule containing weekly item prices.

10. The method of claim 1, wherein i is representative of each item;

wherein d_i is representative of the delay cost;

wherein b_i is representative of the markdown spend; and

wherein ratio d_i/b_i is representative of the delay efficiency metric.

11. The method of claim 1, wherein the markdown spend is indicative of a reduction in value of inventory on hand at a beginning of a markdown period after a markdown.

12. A system for identifying an item to be marked down, comprising:

one or more processors;

one or more computer-readable storage media containing instructions configured to cause the one or more processors to perform operations including;

determining an optimal markdown plan for each item in a pool of items, wherein the optimal markdown plan maximizes revenue when an item is marked down during a first budget period;

determining an optimal delay plan for each item, wherein the optimal delay plan maximizes revenue when an item is marked down during a second budget period that is subsequent to the first budget period;

calculating a delay cost for each item using a difference between the optimal markdown plan maximized revenue and the delayed markdown plan maximized revenue;

determining a markdown spend for each item using the optimal markdown plan;

determining a delay efficiency metric for each item using the delay cost and the markdown spend; and

identifying an item in the pool of items to be marked down using the delay efficiency metric.

13. A non-transitory machine-readable medium tangibly embodying a computer program product for identifying an item to be marked down, including instructions configured to cause a data processing system to:

determine an optimal markdown plan for each item in a pool of items, wherein the optimal markdown plan maximizes revenue when an item is marked down during a first budget period;

determine an optimal delay plan for each item, wherein the optimal delay plan maximizes revenue when an item is marked down during a second budget period that is subsequent to the first budget period;

calculate a delay cost for each item using a difference between the optimal markdown plan maximized revenue and the delayed markdown plan maximized revenue;

determine a markdown spend for each item using the optimal markdown plan;

determine a delay efficiency metric for each item using the delay cost and the markdown spend; and

identify an item in the pool of items to be marked down using the delay efficiency metric.