Profit optimization

Abstract

Profit optimization methods and systems for a supply chain are described. An implementation of the technique includes determining the initial cost of components required to manufacture a product, dynamically determining the cost for substitution of at least one product component, dynamically determining the location of at least one substitute component, and manufacturing the product for the lowest cost based on the results of the cost of substittuion and substitute component location determinations. At least one of the cost of substitute components and the component locations may be determined at or near the time of manufacture.

1 . A profit optimization method comprising: 
 determining the initial cost of components required to manufacture a product;    dynamically determining the cost for substitution of at least one product component;    dynamically determining the location of at least one substitute component; and    manufacturing the product for the lowest cost based on the results of the cost of substitution and substitute component location determinations.    
     
     
         2 . The method of  claim 1  wherein at least one of the cost of substitute components and the component locations are determined at or near the time of manufacture.  
     
     
         3 . An article comprising a computer-readable medium that stores executable instructions for causing a computer system to: 
 determine the initial cost of components required to manufacture a product;    dynamically determine the cost for substitution of at least one product component;    dynamically determine the location of at least one substitute component; and    generate an output indicating how to manufacture the product for the lowest cost based on the results of the cost of substitution and substitute component location determinations.    
     
     
         4 . The article of  claim 3 , further comprising instructions for causing the computer to determine at least one of the cost of substitute components and the component locations at or near the time of manufacture.  
     
     
         5 . A profit optimization system comprising: 
 at least one database storage unit; and    at least one processor coupled to the storage unit, wherein the processor is operable to: 
 determine the initial cost of components required to manufacture a product;  
 dynamically determine the cost for substitution of at least one product component;  
 dynamically determine the location of at least one substitute component; and  
 generate instructions to manufacture the product for the lowest cost based on the results of the cost of substitution and substitute component location determinations.  
   
     
     
         6 . A profit optimization method comprising: 
 defining a set of manufacturing rules based on customer segments;    allocating critical product components according to preferred customer segments;    allocating manufacturing capacity according to the preferred customer segments; and    manufacturing the product.    
     
     
         7 . The method of  claim 6  wherein the product components and manufacturing capacity are allocated according to a feasibility analysis.  
     
     
         8 . An article comprising a computer-readable medium that stores executable instructions for causing a computer system to: 
 define a set of manufacturing rules based on customer segments;    allocate critical product components according to preferred customer segments;    allocate manufacturing capacity according to the preferred customer segments; and    generate instructions to manufacture the product.    
     
     
         9 . The article of  claim 8  further comprising instruction to cause the computer system to allocate the product components and manufacturing capacity according to a feasibility analysis.  
     
     
         10 . A profit optimization system comprising: 
 at least one database storage unit; and    at least one processor coupled to the storage unit, wherein the processor is operable to: 
 define a set of manufacturing rules based on customer segments;  
 allocate critical product components according to preferred customer segments;  
 allocate manufacturing capacity according to the preferred customer segments; and  
 generate instructions to manufacture the product.  
   
     
     
         11 . A profit optimization method comprising: 
 monitoring product demand and allocation reservations for product components;    comparing the product demand and component allocation reservations with demand forecasts at predetermined intervals;    dynamically assigning component allocations for preferred customer segments according to a comparison of the forecasted and monitored demand; and    manufacturing the product for the preferred customer segments before manufacturing the product for other customer segments.    
     
     
         12 . The method of  claim 11  wherein preferred customer segments are determined according to predefined rules.  
     
     
         13 . The method of  claim 11  wherein monitoring product demand and allocation reservations is conducted in regular intervals.  
     
     
         14 . The method of  claim 11  further comprising alerting a user when a component allocation is changed.  
     
     
         15 . An article comprising a computer-readable medium that stores executable instructions for causing a computer system to: 
 monitor product demand and allocation reservations for product components;    compare the product demand and component allocation reservations with demand forecasts at predetermined intervals;    dynamically assign component allocations for preferred customer segments according to a comparison of the forecasted and monitored demand; and    generate instructions to manufacture the product for the preferred customer segments before manufacturing the product for other customer segments.    
     
     
         16 . The article of  claim 15  further comprising instructions to cause the computer system to determine customer segments according to predefined rules.  
     
     
         17 . The article of  claim 15  further comprising instructions to cause the computer system to monitor product demand and allocation reservations in regular intervals. 
 The article of  claim 15  further comprising instructions to cause the computer system to alert a user when a component allocation is changed.    
     
     
         18 . A profit optimization system comprising: 
 at least one database storage unit; and    at least one processor coupled to the storage unit, wherein the processor is operable to: 
 monitor product demand and allocation reservations for product components;  
 compare the product demand and component allocation reservations with demand forecasts at predetermined intervals;  
 dynamically assign component allocations for preferred customer segments according to a comparison of the forecasted and monitored demand; and  
 generate instructions to manufacture the product for the preferred customer segments before manufacturing the product for other customer segments.  
   
     
     
         19 . A profit optimization method comprising: 
 dynamically monitoring product demand and component allocation reservations;    comparing the monitored product demand and component allocation reservations to a forecasted demand;    offering customers at least one less expensive substitute component of the product in place of a requested component; and    manufacturing the product for a first price if the substitute component is accepted, or    manufacturing the product for a second, higher price if the substitute component is not accepted.    
     
     
         20 . The method of  claim 19 , wherein price changes are imposed in fixed increments.  
     
     
         21 . The method of  claim 19  wherein price changes are determined according to price sensitivity functions.  
     
     
         22 . The method of  claim 19  wherein at least one customer offer includes an optimal price based on a price elasticity value and cannibalization effects.  
     
     
         23 . An article comprising a computer-readable medium that stores executable instructions for causing a computer system to: 
 dynamically monitor product demand and component allocation reservations;    compare the monitored product demand and component allocation reservations to a forecasted demand;    generate a customer offer including at least one less expensive substitute component of the product in place of a requested component; and    generate instructions to manufacture the product for a first price if the substitute component is accepted, or to manufacture the product for a second, higher price if the substitute component is not accepted.    
     
     
         24 . The article of  claim 23  further comprising instructions to impose price changes in fixed increments.  
     
     
         25 . The article of  claim 23  further comprising instructions to determine price changes according to price sensitivity functions.  
     
     
         26 . The article of  claim 23  further comprising instructions to wherein offer an optimal price based on a price elasticity value and cannibalization effects.  
     
     
         27 . A profit optimization system comprising: 
 at least one database storage unit; and    at least one processor coupled to the storage unit, wherein the processor is operable to: 
 dynamically monitor product demand and component allocation reservations;  
 compare the monitored product demand and component allocation reservations to a forecasted demand;  
 generate a customer offer including at least one less expensive substitute component of the product in place of a requested component; and  
 generate instructions to manufacture the product for a first price if the substitute component is accepted, or to manufacture the product for a second, higher price if the substitute component is not accepted.  
   
     
     
         28 . A profit optimization method comprising: 
 determining a product manufacturing cost value;    comparing the current price of the product to the cost value and calculating a contribution margin;    comparing the contribution margin to a desired target range for a particular customer segment; and    adjusting at least one of the product price and a product configuration if the contribution margin is outside the target range.    
     
     
         29 . The method of  claim 28  wherein the product manufacturing cost value includes at least one of an assembly cost, available components with known purchase cost, location substitution cost, substitute component costs, and urgent missing supplies cost.  
     
     
         30 . The method of  claim 28  further comprising increasing the product price if the contribution margin is below the target range.  
     
     
         31 . The method of  claim 28  further comprising updating the product manufacturing cost value on a regular basis.  
     
     
         32 . An article comprising a computer-readable medium that stores executable instructions for causing a computer system to: 
 determine a product manufacturing cost value;    compare the current price of the product to the cost value and calculating a contribution margin;    compare the contribution margin to a desired target range for a particular customer segment; and    adjust at least one of the product price and a product configuration if the contribution margin is outside the target range.    
     
     
         33 . The article of  claim 32  further comprising instructions to include at least one of an assembly cost, available components with known purchase cost, location substitution cost, substitute component costs, and urgent missing supplies cost in the product manufacturing cost value.  
     
     
         34 . The article of  claim 32  further comprising instructions to increase the product price if the contribution margin is below the target range.  
     
     
         35 . The article of  claim 32  further comprising instructions to update the product manufacturing cost value on a regular basis.  
     
     
         36 . A profit optimization system comprising: 
 at least one database storage unit; and    at least one processor coupled to the storage unit, wherein the processor is operable to: 
 determine a product manufacturing cost value;  
 compare the current price of the product to the cost value and calculating a contribution margin;  
 compare the contribution margin to a desired target range for a particular customer segment; and  
 adjust at least one of the product price and a product configuration if the contribution margin is outside the target range.  
   
     
     
         37 . A profit optimization method comprising: 
 determining a contribution margin for each product order;    calculating prices for different product configurations such that product demand will be met for preferred customer segments;    presenting different product configurations at the calculated prices to customers; and    manufacturing the products selected by the customers.    
     
     
         38 . The method of  claim 37  wherein the different product configurations and prices include at least one of the original product configuration, a plurality of different component substitutions, and lead time considerations.  
     
     
         39 . An article comprising a computer-readable medium that stores executable instructions for causing a computer system to: 
 determine a contribution margin for each product order;    calculate prices for different product configurations such that product demand will be met for preferred customer segments;    present different product configurations at the calculated prices to customers; and    manufacture the products selected by the customers.    
     
     
         40 . The article of  claim 39  further comprising instructions to generate product prices for at least one of the original product configuration, a plurality of different component substitutions, and lead time considerations.  
     
     
         41 . A profit optimization system comprising: 
 at least one database storage unit; and    at least one processor coupled to the storage unit, wherein the processor is operable to:    determine a contribution margin for each product order;    calculate prices for different product configurations such that product demand will be met for preferred customer segments;    present different product configurations at the calculated prices to customers; and    manufacture the products selected by the customers.    
     
     
         42 . A method for optimizing profit comprising: 
 determining the margin amount of an original customer product order;    identifying at least one potential bundled product package containing more than the requested product order that would contribute to overall profits;    generating a probability value equal to the likelihood that the customer would accept a bundled product package at a special price; and    offering at least one bundled product package at the special price to the customer if the probability value is greater than a predetermined value.    
     
     
         43 . The method of  claim 42  wherein the special price is a discount price that is determined according to a pricing and discount strategy.  
     
     
         44 . The method of  claim 43  wherein the pricing and discount strategy includes deriving at least a portion of an order-specific price of a product bundle offering using customer price elasticity functions.  
     
     
         45 . The method of  claim 42  further comprising offering special discount prices for at least one specific product bundle depending on the price elasticity of the additional product offering.  
     
     
         46 . The method of  claim 42  wherein at least one potential bundled product package would optimally contribute to overall profits.  
     
     
         47 . An article comprising a computer-readable medium that stores executable instructions for causing a computer system to: 
 determine the margin amount of an original customer product order;    identify at least one potential bundled product package containing more than the requested product order that would contribute to overall profits;    generate a probability value equal to the likelihood that the customer would accept a bundled product package at a special price; and    offer at least one bundled product package at the special price to the customer if the probability value is greater than a predetermined value.    
     
     
         48 . The article of  claim 47  further comprising instructions to determine the special price according to a pricing and discount strategy.  
     
     
         49 . The article of  claim 48  wherein instructions to determine the pricing and discount strategy include instructions for deriving at least a portion of an order-specific price of a product bundle offering using customer price elasticity functions.  
     
     
         50 . The article of  claim 47  further comprising instructions to offer special discount prices for at least one specific product bundle depending on the price elasticity of the additional product offering.  
     
     
         51 . The article of  claim 47  further comprising instructions to ensure that at least one potential bundled product package optimally contributes to overall profits.  
     
     
         52 . A profit optimization system comprising: 
 at least one database storage unit; and    at least one processor coupled to the storage unit, wherein the processor is operable to: 
 determine the margin amount of an original customer product order;  
 identify at least one potential bundled product package containing more than the requested product order that would contribute to overall profits;  
 generate a probability value equal to the likelihood that the customer would accept a bundled product package at a special price; and  
 offer at least one bundled product package at the special price to the customer if the probability value is greater than a predetermined value.