Reverse Engineering Retail Business Rules from Price Data
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Solution Overview
Problem
Retailers face difficulties in articulating and generating business rules for price optimization due to their non-codified and inconsistent nature, which hinders the generation of recommended prices that maximize revenue and profit while adhering to established rules.
Innovation Solution
A system and method for reverse engineering business rules from existing price information, leveraging model parameters and inputs to generate price bounds and rule parameters for bounded and comparative business rules, allowing for the optimization of prices within product networks to comply with business rules.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If price optimization techniques are used to maximize revenue and profit, then financial performance is improved, but compliance with business rules cannot be ensured because rules are not codified
Solution Approach 1:
The system performs preliminary action by automatically extracting and codifying business rules from existing price data before price optimization is executed. This preprocessing step ensures that business rules are captured and stored in a structured format, enabling subsequent optimization algorithms to comply with these rules while maximizing revenue and profit.
Solution Approach 2:
The system implements feedback by continuously monitoring price data to extract business rules and using these extracted rules to constrain and guide price optimization. The extracted rules feed back into the optimization process, ensuring that recommended prices comply with established business practices while still achieving financial objectives.
2Reliability
If business rules are manually codified to ensure compliance, then rule adherence is improved, but the process becomes complex and difficult due to inconsistent rule documentation
Solution Approach 1:
The system applies self-service by automatically extracting business rules from existing price data without requiring manual codification. The system serves itself by learning patterns and rules directly from historical pricing information, eliminating the need for complex manual rule documentation and reducing the complexity of the codification process.
Solution Approach 2:
The system replaces the mechanical process of manual rule codification with an automated computational approach. Instead of manually documenting and structuring business rules, the system uses algorithms to automatically extract rules from price data, substituting human effort with automated mechanical processes that are less prone to error and inconsistency.
3Measurement precision
If existing price information is leveraged to extract business rules, then rule generation accuracy is improved, but the system requires sophisticated analysis capabilities
Solution Approach 1:
The system uses an intermediary approach by introducing automated rule extraction algorithms that bridge the gap between existing price data and usable business rules. These algorithms act as intermediaries that translate raw price information into structured, actionable business rules, improving extraction accuracy while managing system complexity through modular algorithm design.
Data Source
AI summary
Business rules can govern a single price or they can define relationships between different products involving two or more decision prices. One problem that retailers can face is that business rules are generally not codified and are rarely followed consistently, and thus it can be difficult to articulate existing business rules or generate new business rules. However, existing price information inherently contains industry knowledge and experience, even if retailers find it difficult to express that knowledge. The disclosed technology generates business rules by reverse engineering rule bounds and coefficients from existing price information. The reverse engineered rule bounds and coefficients can be used in price optimization to generate recommended prices for retail products that optimize revenue and profit while complying with a set of business rules.