Short-Expiration Inventory Planning with Promotion Forecasting
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Solution Overview
Problem
Existing inventory planning systems for short expiration goods fail to accurately forecast sales and promotions, leading to suboptimal purchase quantities and increased costs due to obsolescence and stockout, especially when dealing with a large variety of correlated commodities.
Innovation Solution
An inventory planning system utilizing a demand forecast model, promotion forecast model, and inventory planning model to automatically recommend purchase quantities based on expiration periods, historical sales, and promotion information, employing data-driven methods and mathematical simulations to estimate joint demand distributions and sales volumes.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Measurement precision
If traditional historical average sales method is used to forecast sales volumes, then the forecast is simple to calculate, but the accuracy is low and cannot capture promotion dynamics
Solution Approach 1:
The patent applies dynamics by transitioning from static historical average forecasting to dynamic forecast models that incorporate promotion information and expiration periods. The demand forecast model dynamically adjusts predictions based on promotion schedules and time-to-expiration, enabling accurate capture of sales dynamics throughout the product lifecycle.
Solution Approach 2:
The patent implements preliminary action by pre-calculating forecast results for multiple scenarios (with and without promotions, different expiration periods) before actual sales occur. The system pre-determines optimal purchase quantities and promotion strategies in advance, allowing real-time execution without manual intervention.
2Adaptability or versatility
If newsvendor model is used to plan inventory and demand relationship, then the optimum purchase quantity can be achieved for single commodity, but it cannot handle correlated demands of hundreds or thousands of commodities
Solution Approach 1:
The patent merges the newsvendor model with demand forecasting models and simulation techniques to handle multiple correlated commodities. By combining single-commodity optimization with multi-commodity demand correlation analysis, the system achieves both theoretical optimality and practical scalability across hundreds or thousands of products.
Solution Approach 2:
The patent creates a universal inventory planning system that can handle diverse commodity types with different expiration periods and promotion patterns. The system universally applies the same framework across all commodities, adjusting parameters dynamically rather than requiring separate models for each product category.
3Adaptability or versatility
If fixed promotion time and discounts are assumed in dynamic pricing algorithms, then the algorithm is simple to implement, but it does not match actual situations where promotion patterns vary
Solution Approach 1:
The patent applies dynamics by making promotion timing and discount rates variable rather than fixed. The demand forecast model dynamically adjusts promotion parameters based on actual promotion schedules, expiration periods, and historical sales patterns, enabling the system to adapt to varying promotion strategies without requiring complex real-time optimization.
Data Source
AI summary
An inventory planning system and an inventory planning method for short expiration goods are provided. The inventory planning system includes: a demand forecast model configured to provide a future sales prediction of the at least one short expiration goods according to an expiration period information, a promotion information and a historical sales information of at least one short expiration goods; a promotion forecast model configured to provide a future promotions sales of the at least one short expiration goods according to the expiration period information, the promotion information and the historical sales information of the at least one short expiration goods; and an inventory planning model configured to provide a purchase quantity recommendation of the at least one short expiration goods according to a current stock, the future sales prediction and the future promotions sales of the at least one short expiration goods.