Machine Learning Model for Predicting Merchant Operating Hours
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Solution Overview
Problem
Merchants face difficulties in optimizing their operating hours as they lack sales data for hours when closed, making it challenging to assess the profitability of extending hours.
Innovation Solution
A system using a trained machine learning model processes transactional data from similar merchants to estimate potential customer transactions during closed hours, providing recommendations for adjusting operating hours based on computed estimates.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of information
If merchants use their own internal sales data to evaluate current operating hours, then they can assess profitability of current hours, but they cannot assess profitability of extending hours beyond current operating hours due to lack of sales data
Solution Approach 1:
The patent introduces an intermediary machine learning model that acts as a mediator between available sales data and the need to predict sales during closed hours. The model takes transactional data from similar merchants as input and produces estimated sales figures for periods when the target merchant is closed, enabling profitability assessment without direct observational data
Solution Approach 2:
The system creates a virtual copy of sales patterns by training a machine learning model on transactional data from similar merchants. This copied behavioral pattern allows the system to simulate and predict what sales would look like during closed hours, effectively replicating the information that would otherwise be unavailable
2Productivity
If merchants extend operating hours to capture potential customers, then they may increase revenue, but they incur additional operating costs without knowing if the extension is worthwhile
Solution Approach 1:
The system performs preliminary analysis by computing estimates of potential customer transactions before the merchant makes the decision to extend hours. The machine learning model predicts what sales would be during extended hours based on patterns from similar merchants, allowing the merchant to evaluate the financial case beforehand and make an informed decision about whether extension is worthwhile
Data Source
AI summary
Systems and methods relate to predicting improved operating hours for a merchant. For example, a method may include determining operating hours of a target merchant; identifying one or more merchants other than the target merchant having one or more common characteristics with the target merchant; obtaining transactional data indicating customer transactions at the one or more merchants other than the target merchant; computing an estimate of potential customer transactions at the target merchant during a the period of time not within the operating hours by processing input data including the obtained transactional data using a trained machine learning model to produce the estimate, the estimate being a number or value of consumer transactions missed as a result of the target merchant being closed during the period of time; and transmitting, to the target merchant, information indicating the computed estimate.