Patent ID: 7895067

Claim:
A non-transitory computer readable medium that stores instructions that when executed by a computer cause the computer to perform a method for optimizing merchandise profitability, the method comprising: A. modeling gross margin for a retail enterprise as a function of at least i. product breadth and product depth for each of at least one class of goods retailed by each of at least one retail site in a group of sites of that retail enterprise, wherein each group of sites comprises one or more retail sites, and ii. expected discount price for each such class of goods at each such retail site in such group of sites, wherein the modeling includes modeling the gross margin in accordance with the relation: GM$ = ∑ c ⁢ ∑ s ⁢ N s ⁢ x cs ⁡ ( P cs ⁡ ( 1 - d cs ) - C cs ) where GM$ represents gross margin for the retail enterprise; N s represents a number of sites in each such group of sites; x cs represents total units to be bought for class of goods c at each such site in such group of sites s; P cs represents a full price for an average item in class of goods c in each such site in each such group of sites; d cs represents an expected discount for each such class of goods c in each such site in each such group of sites s; and C cs represents average cost for goods to be bought for each such class of goods c in such site in such group of sites s; B. constraining the gross margin so modeled, C. determining and generating, for at least one such retail site in such group of sites, an optimal product breadth, optimal product depth, and optimal discount price, of at least one such class of goods retailed by that site, wherein the determining step includes maximizing the gross margin for the retail enterprise.