System and method for integrating retail price optimization for revenue and profit with business rules
The disclosed technology improves the process of generating recommended prices for retail products by optimizing revenue and profit while complying with a set of business rules by assigning a monetary value to each business rule. Then for each decision price that violates a business rule constraint, a penalty value is added to the monetary value. If the monetary value including the penalty is better than an original monetary value, the decision price is included in the recommended prices.
1. A computer-implemented method comprising:
obtaining a product network having a decision price set, the product network having one or more price families, each price family of the one or more price families having one or more products; and
generating, via at least one processor, a revenue-profit value for the product network based on the decision price set and a selected weight;
generating a value-plus-constraint for the product network based on the decision price set and the selected weight;
determining a penalty value, the penalty value based on each decision price of the decision price set that violated a flexible business rule and the revenue-profit value;
updating the value-plus-constraint based on the penalty value;
for one or more decision prices of the decision price set that violated the flexible business rules, determining one or more price changes;
in response to a determination that the one or more decision prices does not violate the flexible business rule, updating the decision price set with the one or more price changes.
2. The method of claim 1 , wherein the one or more price changes is at least one positive price change.
3. The method of claim 1 , wherein the one or more price changes is at least one negative price change.
4. The method of claim 1 , wherein the penalty value is determined based on a penalty function including p(εPopt), where a constraint violation e is scaled down by the optimal price Popt.
5. The method of claim 1 , further comprising:
scaling the penalty value by the revenue-profit value to yield a constrained penalty value.
6. The method of claim 5 , wherein the constrained penalty value is Vopt*p(ε/opt), wherein the Vopt is revenue profit value.
7. The method of claim 1 , wherein a violation of the flexible business rule is assigned a monetary value.
8. A system comprising:
a processor; and
a memory storing instructions which when executed by the processor, cause the processor to:
obtain a product network having a decision price set, the product network having one or more price families, each price family of the one or more price families having one or more products; and
generate, via at least one processor, a revenue-profit value for the product network based on the decision price set and a selected weight;
generate a value-plus-constraint for the product network based on the decision price set and the selected weight;
determine a penalty value, the penalty value based on each decision price of the decision price set that violated a flexible business rule and the revenue-profit value;
update the value-plus-constraint based on the penalty value;
for one or more decision prices of the decision price set that violated the flexible business rules, determine one or more price changes;
in response to a determination that the one or more decision prices does not violate the flexible business rule, update the decision price set with the one or more price changes.
9. The system of claim 8 , wherein the one or more price changes is at least one positive price change.
10. The system of claim 8 , wherein the one or more price changes is at least one negative price change.
11. The system of claim 8 , wherein the penalty value is determined based on a penalty function including p(ε/Popt), where a constraint violation e is scaled down by the optimal price Popt.
12. The system of claim 8 , comprising further instructions which when executed cause the processor to scale the penalty value by the revenue-profit value to yield a constrained penalty value.
13. The system of claim 12 , wherein the constrained penalty value is Vopt*p(ε/opt), wherein the Vopt is revenue profit value.
14. The system of claim 8 , wherein a violation of the flexible business rule is assigned a monetary value.
15. A non-transitory computer readable medium storing instructions which when executed by a processor, causes the processor to:
obtain a product network having a decision price set, the product network having one or more price families, each price family of the one or more price families having one or more products; and
generate, via at least one processor, a revenue-profit value for the product network based on the decision price set and a selected weight;
generate a value-plus-constraint for the product network based on the decision price set and the selected weight;
determine a penalty value, the penalty value based on each decision price of the decision price set that violated a flexible business rule and the revenue-profit value;
update the value-plus-constraint based on the penalty value;
for one or more decision prices of the decision price set that violated the flexible business rules, determine one or more price changes;
in response to a determination that the one or more decision prices does not violate the flexible business rule, update the decision price set with the one or more price changes.
16. The non-transitory computer readable medium of claim 15 , wherein the one or more price changes is at least one positive price change.
17. The non-transitory computer readable medium of claim 15 , wherein the one or more price changes is at least one negative price change.
18. The non-transitory computer readable medium of claim 15 , wherein the penalty value is determined based on a penalty function including p(ε/opt), where a constraint violation e is scaled down by the optimal price Popt.
19. The non-transitory computer readable medium of claim 15 , comprising further instructions which when executed cause the processor to scale the penalty value by the revenue-profit value to yield a constrained penalty value.
20. The non-transitory computer readable medium of claim 19 , wherein the constrained penalty value is Vopt*p(ε/Popt), wherein the Vopt is revenue profit value.
21. The non-transitory computer readable medium of claim 15 , wherein a violation of the flexible business rule is assigned a monetary value.