Method and system for managing inventory by expected profitability

• US 8,447,664 B1
• Filed: 03/10/2005
• Issued: 05/21/2013
• Est. Priority Date: 03/10/2005
• Status: Active Grant

• Current Assignee: Amazon Technologies, Inc. (Amazon.com, Inc.)
• Original Assignee: Amazon Technologies, Inc. (Amazon.com, Inc.)
• Inventors: Pape, Craig J., Stecconi, Denise M., Kumar, Suresh, Hall, Joseph K.
• Primary Examiner(s): Ebersman, Bruce I
• Application Number:
  US11/077,432
• Time in Patent Office: 2,994 Days
• Field of Search: None
• US Class Current: 705/28
• CPC Class Codes: G06Q 10/087 Inventory or stock management, e.g. order filling, procurement or balancing against orders

Abstract

A method and system for managing inventory by expected profitability. In one embodiment, a method may include individually evaluating a respective expected profitability for each of a number of inventory items, and individually determining a disposition of each of the number of items dependent upon its respective expected profitability. In one particular implementation of the method, individually evaluating the respective expected profitability of a given item may include forecasting an estimated date of transaction corresponding to the given item, forecasting an estimated revenue corresponding to the given item as of the estimated date of transaction, estimating accrued costs of holding the given item until the estimated date of transaction, and comparing a total cost of the given item against the estimated revenue, where the total cost may include the accrued costs of holding the given item until the estimated date of transaction.

Claims

1. A computer-implemented method, comprising:

individually evaluating, by one or more computers, a respective expected profitability for each particular unit of a plurality of units of items held as inventory, wherein evaluating a respective expected profitability for each particular unit comprises;

accessing one or more records comprising cost information for said particular unit;

forecasting a future date of transaction corresponding to said particular unit;

determining expected costs of holding said particular unit until said forecasted future date of transaction based on said cost information for said particular unit;

determining expected revenue for said unit associated with said forecasted future date of transaction;

determining said respective expected profitability of said particular unit as of said future date of transaction corresponding to said particular unit, wherein determining said respective expected profitability comprises comparing said determined expected costs of holding said particular unit until said forecasted future date of transaction to said determined expected revenue for said unit associated with said forecasted future date of transaction; and

determining whether said particular item is currently profitable but is expected to be unprofitable as of said future date of transaction;

prior to said future date of transaction, individually determining, by one or more computers, a disposition of each respective unit of said plurality of units determined to be currently profitable but expected to be unprofitable as of said future date of transaction; and

responsive to the individually determining, redirecting said each respective unit, wherein, for said each respective unit, redirecting comprises;

notifying a disposition service configured to coordinate liquidation of said each respective unit, updating a record to reflect removal of said each respective unit from inventory, or presenting disposition options for a plurality of conditions of said each respective unit, wherein selection of an option determines how to proceed with said each respective unit.

2. The method as recited in claim 1, wherein determining said respective expected profitability of a particular one of said plurality of units as of a forecasted future date of transaction corresponding to said particular unit comprises:

forecasting an estimated revenue corresponding to said particular unit as of said future date of transaction corresponding to said particular unit;

estimating accrued costs of holding said particular unit until said future date of transaction corresponding to said particular unit; and

comparing a total cost of said particular unit against said estimated revenue, wherein said total cost includes said accrued costs of holding said particular unit until said future date of transaction corresponding to said particular unit.

3. The method as recited in claim 2, wherein individually determining said disposition of a given one of said plurality of units comprises:

if said estimated revenue exceeds said total cost of said given unit by less than a threshold value, determining to dispose of one or more units corresponding to a same item as said given unit prior to said future date of transaction corresponding to said given unit.

4. The method as recited in claim 3, wherein determining a disposition of said one or more units prior to said future date of transaction corresponding to said given unit comprises determining to liquidate at least some of said plurality of units.

5. The method as recited in claim 3, wherein determining a disposition of said one or more units prior to said future date of transaction corresponding to said given unit comprises determining to discount at least some of said plurality units.

6. The method as recited in claim 3, wherein determining a disposition of said one or more units prior to said future date of transaction corresponding to said given unit comprises determining to offer a sales promotion associated with at least some of said plurality of units.

7. The method as recited in claim 2, wherein accrued costs of holding said particular unit comprise a cost of storing said particular unit and an economic cost associated with acquisition of said particular unit.

8. The method as recited in claim 1, further comprising:

subsequent to individually determining said disposition of a given one of said plurality of units, reevaluating said expected profitability of said given unit dependent upon said disposition.

9. The method as recited in claim 1, wherein at least a subset of said plurality of units comprises a plurality of identical units of a same item.

10. The method as recited in claim 1, wherein for a given one of said plurality of units, said disposition comprises:

instructing that one or more of said units corresponding to a same item as said given unit be removed from inventory in response to determining that said respective expected profitability of said given unit is less than a threshold value; and

instructing that one or more of said units corresponding to a same item as said given unit be retained as inventory in response to determining that said respective expected profitability of said given unit is at least greater than said threshold value.

11. The method as recited in claim 1, wherein evaluating said respective expected profitability of said particular unit occurs before said particular item is removed from inventory either for disposition or for delivery to a customer.

12. A non-transitory computer-accessible storage medium storing program instructions, wherein the program instructions are executable by a computer system to implement:

individually evaluating a respective expected profitability for each particular unit of a plurality of units of items held as inventory, wherein evaluating a respective expected profitability for each particular unit comprises;

accessing one or more records comprising cost information for said particular unit;

forecasting a future date of transaction corresponding to said particular unit;

determining expected costs of holding said particular unit until said forecasted future date of transaction based on said cost information for said particular unit;

determining expected revenue for said unit associated with said forecasted future date of transaction;

determining said respective expected profitability of said particular unit as of said future date of transaction corresponding to said particular unit, wherein determining said respective expected profitability comprises comparing said determined expected costs of holding said particular unit until said forecasted future date of transaction to said determined expected revenue for said unit associated with said forecasted future date of transaction; and

determining whether said particular item is currently profitable but is expected to be unprofitable as of said future date of transaction;

prior to said future date of transaction, individually determining a disposition of each respective unit of said plurality of units determined to be currently profitable but expected to be unprofitable as of said future date of transaction; and

responsive to the individually determining, redirecting said each respective unit, wherein, for said each respective unit, redirecting comprises;

notifying a disposition service configured to coordinate liquidation of said each respective unit, updating a record to reflect removal of said each respective unit from inventory, or presenting disposition options for a plurality of conditions of said each respective unit, wherein selection of an option determines how to proceed with said each respective unit.

13. The non-transitory computer-accessible storage medium as recited in claim 12, wherein determining said respective expected profitability of a particular one of said plurality of units as of a forecasted future date of transaction corresponding to said particular unit comprises:

forecasting an estimated revenue corresponding to said particular unit as of said future date of transaction corresponding to said particular unit;

estimating accrued costs of holding said particular unit until said future date of transaction corresponding to said particular unit; and

comparing a total cost of said particular unit against said estimated revenue, wherein said total cost includes said accrued costs of holding said particular unit until said future date of transaction corresponding to said particular unit.

14. The non-transitory computer-accessible storage medium as recited in claim 13, wherein individually determining said disposition of a given one of said plurality of units comprises:

if said estimated revenue exceeds said total cost of said given unit by less than a threshold value, determining to dispose of one or more units corresponding to a same item as said given unit prior to said future date of transaction corresponding to said given unit.

15. The non-transitory computer-accessible storage medium as recited in claim 14, wherein determining a disposition of said one or more units prior to said future date of transaction corresponding to said given unit comprises determining to liquidate at least some of said plurality of units.

16. The non-transitory computer-accessible storage medium as recited in claim 14, wherein determining a disposition of said one or more units prior to said future date of transaction corresponding to said given unit comprises determining to discount at least some of said plurality of units.

17. The non-transitory computer-accessible storage medium as recited in claim 14, wherein determining a disposition of said one or more units prior to said future date of transaction corresponding to said given unit comprises determining to offer a sales promotion associated with at least some of said plurality of units.

18. The non-transitory computer-accessible storage medium as recited in claim 13, wherein accrued costs of holding said particular unit comprise a cost of storing said particular unit and an economic cost associated with acquisition of said particular unit.

19. The non-transitory computer-accessible storage medium as recited in claim 12, wherein the program instructions are further executable by a computer system to implement:

subsequent to individually determining said disposition of a given one of said plurality of units, reevaluating said expected profitability of said given unit dependent upon said disposition.

20. The non-transitory computer-accessible storage medium as recited in claim 12, wherein at least a subset of said plurality of units comprises a plurality of identical units of a same item.

21. The non-transitory computer-accessible storage medium as recited in claim 12, wherein for a given one of said plurality of units, said disposition comprises:

instructing that one or more of said units corresponding to a same item as said given unit be removed from inventory in response to determining that said respective expected profitability of said particular unit is less than a threshold value; and

instructing that one or more of said units corresponding to a same item as said given unit be retained as inventory in response to determining that said respective expected profitability of said particular unit is at least greater than said threshold value.

22. The non-transitory computer-accessible storage medium as recited in claim 12, wherein evaluating said respective expected profitability of said particular unit occurs before said particular item is removed from inventory either for disposition or for delivery to a customer.