SYSTEM AND METHOD FOR OPTIMIZING REVENUE AND PROFIT WITH LIMITED NUMBER OF PRICE CHANGES

摘要

The disclosed technology improves the process of generating recommended prices for retail products. First, the present technology makes it possible to model shopper demand when sales data includes time periods with zero unit sales without hypothesizing whether the time periods are out-of-stock events or zero sales. This can be accomplished by applying a truncated Poisson distribution and the Newton-Raphson method to the non-zero unit sales to generate a coefficient vector that maximizes the likelihood of the observations in the sales data. Second, the present technology can be used to generate recommended prices for a group of products that optimize revenue and profit while limiting the number of products that require price changes to a predefined threshold value. This can be accomplished by iteratively replacing a current best value solution with a next best value solution across a collection of product networks until an acceptable number of unchanged prices is achieved.