Method of modeling product demand subject to a large number of interactions

• US 7,197,474 B1
• Filed: 03/10/2006
• Issued: 03/27/2007
• Est. Priority Date: 07/12/2001
• Status: Expired due to Term

• Current Assignee: Ip Ot Sub Ulc
• Original Assignee: Vignette Corporation (Open Text Corporation)
• Inventors: Kitts, Brendan J.
• Primary Examiner(s): Jeanty; Romain
• Assistant Examiner(s): Deshpande; Kalyan K.
• Application Number:
  US11/373,747
• Time in Patent Office: 382 Days
• Field of Search: 705/10
• US Class Current: 705/7.31
• CPC Class Codes: G06Q 30/02 Marketing; Price estimation or determination; Fundraising
• CPC Class Codes: G06Q 30/0202 Market predictions or forecasting for commercial activities
• CPC Class Codes: G06Q 30/0206 Price or cost determination based on market factors

Abstract

A data processing system-implemented method or data processing system readable medium can be used to model operating parameter(s) for a vendor. Detailed analysis of the impact of prices or other variables, on the demand of each item, is performed. These allow us to prune large numbers of prices or other variables which have little or no impact on a given item. After determining which prices and other variables are significantly related to an item, a more in-depth examination of that small list of variables may be performed. This in-depth examination will result in a set of final weighing factors, quantifying the effect of each on the item. The weighing factors for all other variables can be assigned a value of zero. By limiting the number of non-zero weighing factors, the time needed to generate all the weighing factors for a matrix (or matrices) is reduced.

Claims

1. A computer-implemented method of improving profitability of a store based on knowledge of purchasing interactions between a plurality of items sold within said store over a period of time, comprising:

in the computer,

correlating price-quantity interactions between each pair of items of said plurality of items based on transaction data collected from one or more sources;

determining top positive and negative correlated items based on said price-quantity interactions;

calculating weighing factors for said top positive and negative correlated items;

generating a first matrix for said price-quantity interactions by placing into said first matrix said weighing factors for said top positive and negative correlated items and assigning zeros for rest of said plurality of items in said first matrix; and

determining a demand for quantities for one or more items utilizing said first matrix,

wherein the step of correlating price-quantity interactions comprises generating correlation factors for said plurality of items,

wherein each of said correlation factors represents a correlation between a price change of a first item and a change in quantity of a second item, and

wherein each of said correlation factors Corr_i,j is calculated based on

2. The method of claim 1, further comprising:

correlating variable-quantity interactions between one or more variables and quantities of each of said plurality of items sold within said store over said period of time.

3. The method of claim 2, further comprising:

determining which of said variables have a significant effect on said quantities of said plurality of items based on said variable-quantity interactions; and

generating a second matrix for said variable-quantity interactions by placing into said second matrix non-zero weighing factors that are calculated for items that are significantly affected by said variables and assigning zeros for rest of said plurality of items in said second matrix, wherein the step of determining a demand for quantities for one or more items further comprises utilizing said second matrix.

4. A computer-implemented method of improving profitability of a store based on knowledge of purchasing interactions between a plurality of items sold within said store, comprising:

collecting transaction data containing quantities and prices of said plurality of items sold over a period of time;

constructing quantity and price timeseries for each of said plurality of items;

correlating price-quantity interactions between each pair of items of said plurality of items;

determining top positive and negative correlated items based on said price-quantity interactions;

calculating weighing factors for said top positive and negative correlated items;

generating a first matrix for said price-quantity interactions by placing into said first matrix said weighing factors for said top positive and negative correlated items and assigning zeros for rest of said plurality of items in said first matrix; and

determining a demand for quantities for one or more items utilizing said first matrix,

wherein the step of correlating price-quantity interactions comprises generating correlation factors utilizing said quantity and price timeseries,

wherein each of said correlation factors represents a correlation between a price change of a first item and a chance in quantity of a second item, and

wherein each of said correlation factors Corr_i,j is calculated based on

5. The method of claim 4, wherein the step of collecting transaction data comprises accessing one or more databases, flat files, or a combination thereof to discover data chronicling transactions within said store.

6. The method of claim 4, wherein the step of collecting transaction data comprises accessing a mining results repository to obtain said transaction data.

7. The method of claim 4, wherein the step of constructing quantity and price timeseries for each of said plurality of items comprises changing a row order of said transaction data so that all records for each of said plurality of items are in contiguous rows.

8. The method of claim 4, wherein the step of constructing quantity and price timeseries for each of said plurality of items comprises setting said price timeseries to equal a mean or median price of an item on a particular day and setting said quantity timeseries to be a sum of quantities of said item sold on said particular day.

9. The method of claim 4, wherein the step of constructing quantity and price timeseries for each of said plurality of items comprises filling said price timeseries with a last observed price on days with no transactions.

10. The method of claim 4, wherein the step of constructing quantity and price timeseries for each of said plurality of items comprises replacing quantities of an item sold everyday with a sum of said item sold that day and within a window of days that follow.

11. The method of claim 4, further comprising:

correlating variable-quantity interactions between one or more variables and quantities of each of said plurality of items sold within said store over said period of time; and

determining which of said variables have a significant effect on said quantities of said plurality of items based on said variable-quantity interactions.

12. The method of claim 11, further comprising:

generating a second matrix for said variable-quantity interactions by placing into said second matrix non-zero weighing factors calculated for items that are significantly affected and assigning zeros for rest of said plurality of items in said second matrix.

13. The method of claim 12, wherein said demand is presented by Q and wherein Q is approximately equal to (P×

W+E×

B+C) where

P represents a vector containing said prices of said plurality of items,

W represents said first matrix,

E represents a vector containing said variables,

B represents said second matrix, and

C represents a vector containing constants for said plurality of items.

14. The method of claim 13, further comprising predicting a revenue R for each of said one or more items where R=Q*diag(P).

15. The method of claim 14, further comprising predicting a profit Z for each of said one or more items where Z=R−

Q*diag(P).

16. The method of claim 12, wherein said demand is presented by Q and wherein Q is approximately equal to (P×

W+E×

B+C) where

P represents a single price of an item,

W represents a row vector from said first matrix,

E represents a single value of a variable,

B represents a row vector from said second matrix, and

C represents a single value of a constant for said item.

17. A computer-implemented method of improving profitability of a store based on knowledge of purchasing interactions between a plurality of items sold within said store over a period of time, comprising:

performing at least one significance tests on historical transactional data to determine which one or more variables, including price, have a significant effect on quantities for said plurality of items sold within said store over said period of time;

for each variable determined to have a significant effect on quantities for said plurality of items,

calculating weighing factors for said plurality of items with respect to said variable; and

generating a matrix by placing said weighing factors into said matrix for items that are significantly affected by said variable and assigning zeros for all other items; and

determining a demand for quantities for one or more items utilizing at least one or more of said variables and at least one matrix of weighing factors,

where said price is determined to have a significant effect on quantities for said plurality of items, generating correlation factors wherein each of said correlation factors represents a correlation between a price change of a first item and a change in quantity of a second item, and

wherein each of said correlation factors Corr_i,j is calculated based on

18. A computer-readable medium carrying computer-executable instructions implementing a method of improving profitability of a store based on knowledge of purchasing interactions between a plurality of items sold within said store over a period of time, wherein said computer-executable instructions are coded for:

correlating price-quantity interactions between each pair of items of said plurality of items based on transaction data collected from one or more sources;

determining top positive and negative correlated items based on said price-quantity interactions;

calculating weighing factors for said top positive and negative correlated items;

generating a first matrix for said price-quantity interactions by placing into said first matrix said weighing factors for said top positive and negative correlated items and assigning zeros for rest of said plurality of items in said first matrix; and

determining a demand for quantities for one or more items utilizing said first matrix,

wherein the step of correlating price-quantity interactions comprises generating correlation factors,

wherein each of said correlation factors represents a correlation between a price change of a first item and a change in quantity of a second item, and

wherein each of said correlation factors Corr_i,j is calculated based on

19. The computer-readable medium of claim 18, wherein said computer-executable instructions are further coded for:

correlating variable-quantity interactions between one or more variables and quantities of each of said plurality of items sold within said store over said period of time;

determining which of said variables have a significant effect on said quantities of said plurality of items based on said variable-quantity interactions; and

generating a second matrix for said variable-quantity interactions by placing into said second matrix non-zero weighing factors that are calculated for items that are significantly affected by said variables and assigning zeros for rest of said plurality of items in said second matrix, wherein the step of determining a demand for quantities for one or more items further comprises utilizing said second matrix.

20. A computer system programmed to improve profitability of a store based on knowledge of purchasing interactions between a plurality of items sold within said store over a period of time, said computer system comprising:

a computer-readable medium carrying computer-executable instructions for;

correlating price-quantity interactions between each pair of items of said plurality of items based on transaction data collected from one or more sources;

determining top positive and negative correlated items based on said price-quantity interactions;

calculating weighing factors for said top positive and negative correlated items;

generating a first matrix for said price-quantity interactions by placing into said first matrix said weighing factors for said top positive and negative correlated items and assigning zeros for rest of said plurality of items in said first matrix; and

determining a demand for quantities for one or more items utilizing said first matrix,

wherein correlating price-quantity interactions comprises generating correlation factors,

wherein each of said correlation factors represents a correlation between a price change of a first item and a change in quantity of a second item, and

wherein each of said correlation factors Corr_i,j is calculated based on

21. The computer system of claim 20, wherein said computer-executable instructions are coded for

correlating variable-quantity interactions between one or more variables and quantities of each of said plurality of items sold within said store over said period of time;

determining which of said variables have a significant effect on said quantities of said plurality of items based on said variable-quantity interactions; and

generating a second matrix for said variable-quantity interactions by placing into said second matrix non-zero weighing factors that are calculated for items that are significantly affected by said variables and assigning zeros for rest of said plurality of items in said second matrix, wherein the step of determining a demand for quantities for one or more items further comprises utilizing said second matrix.

22. A computer-readable medium carrying computer-executable instructions implementing a method of improving profitability of a store based on knowledge of purchasing interactions between a plurality of items sold within said store, wherein said computer-executable instructions are coded for:

collecting transaction data containing quantities and prices of said plurality of items sold over a period of time;

constructing quantity and price timeseries for each of said plurality of items;

correlating price-quantity interactions between each pair of items of said plurality of items;

determining top positive and negative correlated items based on said price-quantity interactions;

calculating weighing factors for said top positive and negative correlated items;

generating a first matrix for said price-quantity interactions by placing into said first matrix said weighing factors for said top positive and negative correlated items and assigning zeros for rest of said plurality of items in said first matrix; and

determining a demand for quantities for one or more items utilizing said first matrix,

wherein the step of correlating price-quantity interactions comprises generating correlation factors utilizing said quantity and price timeseries,

wherein each of said correlation factors represents a correlation between a price change of a first item and a change in quantity of a second item, and

wherein each of said correlation factors Corr_i,j is calculated based on

23. The computer-readable medium of claim 22, wherein collecting transaction data comprises accessing one or more databases, flat files, or a combination thereof to discover data chronicling transactions within said store.

24. The computer-readable medium of claim 22, wherein collecting transaction data comprises accessing a mining results repository to obtain said transaction data.

25. The computer-readable medium of claim 22, wherein constructing quantity and price timeseries for each of said plurality of items comprises changing a row order of said transaction data so that all records for each of said plurality of items are in contiguous rows.

26. The computer-readable medium of claim 22, wherein constructing quantity and price timeseries for each of said plurality of items comprises setting said price timeseries to equal a mean or median price of an item on a particular day and setting said quantity timeseries to be a sum of quantities of said item sold on said particular day.

27. The computer-readable medium of claim 22, wherein constructing quantity and price timeseries for each of said plurality of items comprises filling said price timeseries with a last observed price on days with no transactions.

28. The computer-readable medium of claim 22, wherein constructing quantity and price timeseries for each of said plurality of items comprises replacing quantities of an item sold everyday with a sum of said item sold that day and within a window of days that follow.

29. The computer-readable medium of claim 22, wherein said computer-executable instructions are further coded for:

correlating variable-quantity interactions between one or more variables and quantities of each of said plurality of items sold within said store over said period of time; and

determining which of said variables have a significant effect on said quantities of said plurality of items based on said variable-quantity interactions.

30. The computer-readable medium of claim 29, wherein said computer-executable instructions are further coded for generating a second matrix for said variable-quantity interactions by placing into said second matrix non-zero weighing factors calculated for items that are significantly affected and assigning zeros for rest of said plurality of items in said second matrix.

31. The computer-readable medium of claim 30, wherein said demand is presented by Q and wherein Q is approximately equal to (P×

W+E×

B+C) where

P represents a vector containing said prices of said plurality of items,

W represents said first matrix,

E represents a vector containing said variables,

B represents said second matrix, and

C represents a vector containing constants for said plurality of items.

32. The computer-readable medium of claim 31, wherein said computer-executable instructions are further coded for predicting a revenue R for each of said one or more items where R=Q*diag(P).

33. The computer-readable medium of claim 32, wherein said computer-executable instructions are further coded for predicting a profit Z for each of said one or more items where Z=R−

Q*diag(P).

34. The computer-readable medium of claim 30, wherein said demand is presented by Q and wherein Q is approximately equal to (P×

W+E×

B+C) where

P represents a single price of an item,

W represents a row vector from said first matrix,

E represents a single value of a variable,

B represents a row vector from said second matrix, and

C represents a single value of a constant for said item.

35. A computer system programmed to improve profitability of a store based on knowledge of purchasing interactions between a plurality of items sold within said store, said computer system comprising:

a computer-readable medium carrying computer-executable instructions for;

collecting transaction data containing quantities and prices of said plurality of items sold over a period of time;

constructing quantity and price timeseries for each of said plurality of items;

correlating price-quantity interactions between each pair of items of said plurality of items;

determining top positive and negative correlated items based on said price-quantity interactions;

calculating weighing factors for said top positive and negative correlated items;

generating a first matrix for said price-quantity interactions by placing into said first matrix said weighing factors for said top positive and negative correlated items and assigning zeros for rest of said plurality of items in said first matrix; and

determining a demand for quantities for one or more items utilizing said first matrix,

wherein the step of correlating price-quantity interactions comprises generating correlation factors utilizing said quantity and price timeseries,

wherein each of said correlation factors represents a correlation between a price change of a first item and a change in quantity of a second item, and

wherein each of said correlation factors Corr_i,j is calculated based on

36. The computer system of claim 35, wherein collecting transaction data comprises accessing one or more databases, flat files, or a combination thereof to discover data chronicling transactions within said store.

37. The computer system of claim 35, wherein collecting transaction data comprises accessing a mining results repository to obtain said transaction data.

38. The computer system of claim 35, wherein constructing quantity and price timeseries for each of said plurality of items comprises changing a row order of said transaction data so that all records for each of said plurality of items are in contiguous rows.

39. The computer system of claim 35, wherein constructing quantity and price timeseries for each of said plurality of items comprises setting said price timeseries to equal a mean or median price of an item on a particular day and setting said quantity timeseries to be a sum of quantities of said item sold on said particular day.

40. The computer system of claim 35, wherein constructing quantity and price timeseries for each of said plurality of items comprises filling said price timeseries with a last observed price on days with no transactions.

41. The computer system of claim 35, wherein constructing quantity and price timeseries for each of said plurality of items comprises replacing quantities of an item sold everyday with a sum of said item sold that day and within a window of days that follow.

42. The computer system of claim 35, wherein said computer-executable instructions are coded for:

correlating variable-quantity interactions between one or more variables and quantities of each of said plurality of items sold within said store over said period of time; and

determining which of said variables have a significant effect on said quantities of said plurality of items based on said variable-quantity interactions.

43. The computer system of claim 35, wherein said computer-executable instructions are coded for generating a second matrix for said variable-quantity interactions by placing into said second matrix non-zero weighing factors calculated for items that are significantly affected and assigning zeros for rest of said plurality of items in said second matrix.

44. The computer system of claim 43, wherein said demand is presented by Q and wherein Q is approximately equal to (P×

W+E×

B+C) where

P represents a vector containing said prices of said plurality of items,

W represents said first matrix,

E represents a vector containing said variables,

B represents said second matrix, and

C represents a vector containing constants for said plurality of items.

45. The computer system of claim 44, wherein said computer-executable instructions are further coded for predicting a revenue R for each of said one or more items where R=Q*diag(P).

46. The computer system of claim 45, wherein said computer-executable instructions are further coded for predicting a profit Z for each of said one or more items where Z=R−

Q*diag(P).

47. The computer system of claim 43, wherein said demand is presented by Q and wherein Q is approximately equal to (P×

W+E×

B+C) where

P represents a single price of an item,

W represents a row vector from said first matrix,

E represents a single value of a variable,

B represents a row vector from said second matrix, and

C represents a single value of a constant for said item.

48. A computer-readable medium carrying computer-executable instructions implementing a method of improving profitability of a store based on knowledge of purchasing interactions between a plurality of items sold within said store over a period of time, wherein said computer-executable instructions are coded for:

performing at least one significance tests on historical transactional data to determine which one or more variables, including price, have a significant effect on quantities for said plurality of items sold within said store over said period of time;

for each variable determined to have a significant effect on quantities for said plurality of items,

calculating weighing factors for said plurality of items with respect to said variable; and

generating a matrix by placing said weighing factors into said matrix for items that are significantly affected by said variable and assigning zeros for all other items; and

determining a demand for quantities for one or more items utilizing at least one or more of said variables and at least one matrix of weighing factors,

where said price is determined to have a significant effect on quantities for said plurality of items, generating correlation factors wherein each of said correlation factors represents a correlation between a price change of a first item and a change in quantity of a second item, and

wherein each of said correlation factors Corr_i,j is calculated based on

49. A computer system programmed to improve profitability of a store based on knowledge of purchasing interactions between a plurality of items sold within said store over a period of time, said computer system comprising:

a computer-readable medium carrying computer-executable instructions for;

performing at least one significance tests on historical transactional data to determine which one or more variables, including price, have a significant effect on quantities for said plurality of items sold within said store over said period of time;

for each variable determined to have a significant effect on quantities for said plurality of items,

calculating weighing factors for said plurality of items with respect to said variable; and

generating a matrix by placing said weighing factors into said matrix for items that are significantly affected by said variable and assigning zeros for all other items; and

determining a demand for quantities for one or more items utilizing at least one or more of said variables and at least one matrix of weighing factors,

where said price is determined to have a significant effect on quantities for said plurality of items, generating correlation factors wherein each of said correlation factors represents a correlation between a price change of a first item and a change in quantity of a second item, and

wherein each of said correlation factors Corr_i,j is calculated based on