Generating an Optimized Price Schedule for a Product

Abstract

Generating a price schedule involves generating a graph having paths that include states with values. The graph is generated by determining the values of a successor state from the values of a predecessor state. An optimal path is selected, and a price schedule is determined from the optimal path. Computing an elasticity curve involves having a demand model, values for demand model, and filter sets that restrict the values. Elasticity curves are determined by filtering the values using filter sets, and calculating the elasticity curve using the demand model. A best-fitting elasticity curve is selected. Adjusting a demand forecast value includes estimating an inventory and a demand at a number of locations. An expected number of unrealized sales at each location is calculated. An sales forecast value is determined according to the expected number.

Description

CLAIM OF PRIORITY [0001] This application is a divisional of U.S. patent application Ser. No. 09 / 896,388 filed on 28 Jun. 2001 entitled “GENERATING AN OPTIMIZED PRICE SCHEDULE FOR A PRODUCT”, and which claims the benefit under 35 U.S.C. § 119(e) of U.S. Provisional Application Ser. No. 60 / 238,676, filed Oct. 6, 2000. U.S. patent application Ser. No. 09 / 896,388 and U.S. Provisional Application Ser. No. 60 / 238,676 are commonly assigned to the assignee of the present application. The disclosure of related U.S. patent application Ser. No. 09 / 896,388 and U.S. Provisional Application Ser. No. 60 / 238,676 are hereby incorporated by reference into the present disclosure as if fully set forth herein.BACKGROUND [0002] 1. Technical Field of the Invention [0003] This invention relates in general to commercial environments, and more particularly to generating an optimized price schedule for a product. [0004] 2. Background of the Invention [0005] An important decision for a business to make is det...

AI Technical Summary

Benefits of technology

The present invention provides a method for generating an optimized price schedule by generating a transition graph with paths and states, and calculating the price schedule by filtering the values of the states using a demand model. This method allows for the efficient generation of an optimized price schedule that maximizes business objectives while satisfying business constraints. The invention also takes into account the elasticity of a product and the uncertainty of a demand forecast or elasticity model to improve the accuracy of the optimal price schedule. The invention may be used to compute an optimal sequence of product markdowns, determine optimal start and end dates of a markdown horizon, and guide the decision of how many units of which product should be acquired for subsequent sale. The technical effects of the invention include reducing the time and power required to generate an optimized price schedule, improving the accuracy of the optimal price schedule, and optimizing inventory management.

Problems solved by technology

Informed pricing decisions, however, may be difficult to make, since these decisions may need to reflect a large number of business objectives and operating constraints, and may need to be made for a large number of items across a large number of sales locations.

Optimizing price schedules, however, may be computationally difficult.

As a result, previous techniques for generating an optimized price schedule have been inadequate.

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