Interface for merchandise price optimization

• US 7,240,019 B2
• Filed: 05/10/2002
• Issued: 07/03/2007
• Est. Priority Date: 05/04/2001
• Status: Expired due to Fees

• Current Assignee: Acoustic, L.P.
• Original Assignee: DemandTec Inc. (International Business Machines Corporation)
• Inventors: Delurgio, Phil, Neal, Michael
• Primary Examiner(s): MEINECKE DIAZ, SUSANNA M
• Application Number:
  US10/144,537
• Publication Number:
  US 20020165834A1
• Time in Patent Office: 1,880 Days
• Field of Search: 705/10, 705/400
• US Class Current: 705/7.31
• 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 10/0639 Performance analysis of employees; Performance analysis of enterprise or organisation operations
• CPC Class Codes: G06Q 20/201 Price look-up processing, e.g. updating
• 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
• CPC Class Codes: G06Q 30/0283 Price estimation or determination

Abstract

An apparatus is provided for an interface enabling a user to determine optimum prices of products for sale. The interface includes a scenario/results processor that enables the user to prescribe an optimization scenario, and that presents the optimum prices to the user. The optimum prices are determined by execution of the optimization scenario, where the optimum prices are determined based upon estimated product demand and calculated activity based costs. The scenario/results processor has an input/output processor and a scenario controller. The input/output processor acquires data corresponding to the optimization scenario from the user, and distributes optimization results to the user, where the data includes activity based cost data. The scenario controller is coupled to the input/output processor. The scenario controller controls acquisition of the data and the distribution of the optimization results in accordance with a price optimization procedure.

Claims

1. An interface enabling a user to determine optimum prices of products for sale, comprising:

a scenario/results processor, configured to enable the user to prescribe an optimization scenario, and configured to present the optimum prices to said user, wherein the optimum prices are determined by execution of said optimization scenario, wherein said optimum prices are determined based upon estimated product demand and calculated activity based costs, said scenario/results processor comprising;

an input/output processor, configured to acquire data corresponding to said optimization scenario from the user, and configured to distribute optimization results to the user, wherein said data comprises activity based cost data corresponding to the products for sale, and wherein said input/output processor comprises;

a template controller, configured to provide first price optimization templates and second price optimization templates, wherein said price optimization templates are presented to said user to allow for prescription of said optimization scenario, and for distribution of said optimization results, and wherein said first price optimization templates comprise;

a plurality of new scenario templates, configured to enable said user to prescribe scenario parameters corresponding to said optimization scenario, wherein said plurality of new scenario templates comprise;

an at-large rules template, from specifying rules to govern determination of the optimum prices, said rules comprising;

 

maximum allowable price swing for each of the products for sale; and

 

maximum allowable for average price of each demand group within a plurality of demand groups; and

a command interpreter;

configured to extract commands from said first price optimization templates executed by said user, and configured to populate said second price optimization templates according to result data provided for presentation to said user; and

a scenario controller, coupled to said input/output processor, configured to control acquisition of said data and the distribution of said optimization results in accordance with a price optimization procedure.

2. The interface as recited in claim 1, wherein said data is acquired from said user over the Internet via a packet-switched protocol.

3. The interface as recited in claim 2, wherein said packet-switched protocol comprises TCP/IP protocol.

4. The interface as recited in claim 3, wherein said data is interactively provided by and said optimization results are interactively distributed to said user.

5. The interface as recited in claim 3, wherein said data is acquired from a source electronic file and said optimization results are distributed to a destination electronic file, said electronic files being designated by said user.

6. The interface as recited in claim 1, wherein said first and second price optimization templates are provided according to hypertext markup language (HTML).

7. The interface as recited in claim 1, wherein said first and second price optimization templates are provided according to extensible markup language (XML).

8. The interface as recited in claim 1, wherein said first and second price optimization templates are provided as Java applets.

9. The interface as recited in claim 1, wherein said plurality of new scenario templates further comprises:

a category template, for specifying a product category for price optimization, said product category comprising;

said plurality of demand groups, each of said plurality of demand groups configured to categorize a set of highly correlated products, wherein said highly correlated products are normally substitute products, but may also be complementary products.

10. The interface as recited in claim 9, wherein said plurality of new scenario templates further comprises:

a products template, for specifying the products for sale, wherein the products for sale may span more than one of said plurality of demand groups.

11. The interface as recited in claim 9, wherein said plurality of new scenario templates further comprises:

a locations template, for specifying a plurality of store groups for which the optimum prices are to be determined, wherein, when determining the optimum prices, the apparatus employs portions of said data that correspond to said plurality of store groups.

12. The interface as recited in claim 9, wherein said plurality of new scenario templates further comprises:

a time horizon template, for specifying a time period for which the optimum prices are to be determined.

13. The interface as recited in claim 9, wherein said plurality of new scenario templates further comprises:

a strategy template, for specifying a merchandising performance figure of merit, and for specifying limits for changes in sales volume.

14. The interface as recited in claim 13, wherein options for specification of said merchandising performance figure of merit comprise net profit, said sales volume, and revenue.

15. The interface as recited in claim 1, wherein said second price optimization templates comprise:

a price optimization results template, for providing said user with said result data corresponding to said optimization scenario.

16. The interface as recited in claim 15, wherein said result data comprises optimized values and percent change values for merchandising factors, wherein said merchandising factors comprise one or more of the following:

volume, revenue, product cost, gross margin, and net profit.

17. The interface as recited in claim 16, wherein said result data is presented graphically.

18. An interface enabling a user to determine optimum prices of products for sale, comprising:

a scenario/results processor, configured to enable the user to prescribe an optimization scenario, and configured to present the optimum prices to the user, wherein the optimum prices are determined by execution of said optimization scenario, wherein said optimum prices are determined based upon estimated product demand and calculated activity based costs for products within demand groups, and wherein said estimated product demand is modeled using a Bayesian Shrinkage methodology, said scenario/results processor comprising;

an input/output processor, configured to acquire data corresponding to said optimization scenario from the user, and configured to distribute optimization results to the user, wherein said data comprises activity based cost data corresponding to the products for sale, and wherein said input/output processor comprises;

a template controller, configured to provide first price optimization templates and second price optimization templates, wherein said price optimization templates are presented to the user to allow for prescription of said optimization scenario, and for distribution of said optimization results, and wherein said first price optimization templates comprise;

a plurality of new scenario templates, configured to enable the user to prescribe scenario parameters corresponding to said optimization scenario, wherein said plurality of new scenario templates comprise;

an at-large rules template, for specifying rules to govern determination of the optimum prices, said rules comprising;

 

maximum allowable price swing for each of the products for sale; and

 

maximum allowable swing for average price of each demand group within a plurality of demand groups; and

a command interpreter;

configured to extract commands from said first price optimization templates executed by the user, and configured to populate said second price optimization templates according to result data provided for presentation to the user; and

a scenario controller, coupled to said input/output processor, configured to control acquisition of said data and the distribution of said optimization results in accordance with a price optimization procedure.

19. The interface as recited in claim 18, wherein said Bayesian Shrinkage methodology estimates coefficients for use in predicting said estimated product demand.

20. The interface as recited in claim 19, wherein said input/output processor acquires activity based cost data from the user, and wherein said activity based cost data is employed in conjunction with industry standard average data to calculate said activity based costs for said products within said demand groups.

21. The interface as recited in claim 20, wherein said data is interactively provided by and said optimization results are interactively distributed to the user.

22. The interface as recited in claim 18, wherein said plurality of new scenario templates further comprises:

a category template, for specifying a product category for price optimization, said product category comprising;

said plurality of demand groups, each of said plurality of demand groups configured to categorize a set of highly correlated products, wherein said highly correlated products are normally substitute products, but may also be complementary products;

a products template, for specifying the products for sale, wherein the products for sale may span more than one of said plurality of demand groups;

a locations template, for specifying a plurality of store groups for which the optimum prices are to be determined, wherein, when determining the optimum prices, the apparatus employs portions of said data that correspond to said plurality of store groups; and

a time horizon template, for specifying a time period for which the optimum prices are to be determined.

23. The interface as recited in claim 22, wherein said plurality of new scenario templates further comprises:

a strategy template, for specifying a merchandising performance figure of merit, and for specifying limits for changes in sales volume.

24. The interface as recited in claim 23, wherein options for specification of said merchandising performance figure of merit comprise net profit, said sales volume, and revenue.

25. The interface as recited in claim 18 wherein said second price optimization templates comprise:

a price optimization results template, for providing said user with said result data corresponding to said optimization scenario.

26. The interface as recited in claim 25, wherein said result data comprises optimized values and percent change values for merchandising factors, wherein said merchandising factors comprise one or more of the following:

volume, revenue, product cost, gross margin, and net profit.