Optimization Models Examples
Pricefx repositories pw-accelerator repository and poai-demo-logic repository (accessible to Pricefx staff only) provide models examples. Here they are reproduced and some concepts are explained.
POAI Demo Model
In this example, there are many spaces. Among them:
by SKU – Variables are defined at an SKU level:
Global List Price is a value finder (green circle).
COGS is a value given by the data (grey circle).
by Region – Local Adjustment Rate value finder is defined at a region level.
by region and SKU – Local List Price is calculated (white circle) from SKU Global List Price and Local Adjustment Rate.
by SKU, Customer, Channel, and Period (intersection of all these spaces) – There are many variables and one constraint:
One value finder (green circle): Customer Negotiated Discount Rate.
Many calculated values (white circles).
Channel Alignment criteria (red triangle) is a hard constraint that applies to Invoice Prices.
Etc.
There is also a global maximization criterion called “>= Historical” and applied to the Profit calculated global value.
PW Accelerator Model
In this example, we see some other concepts like:
There is a product hierarchy Product Group / Product, as the Product rectangle is nested inside the Product Group one.
The same applies to Customer Group – Customer.
There is a Maximization criteria at the global (dimensionless) level.
There are target criteria, one at the Product Group level and one at the Customer Group level. Thus in the system, there are as many target criteria as the sum of the number of product groups and the number of customer groups.
There are thresholds criteria on the Unit Invoice Price, at a Customer x Product level, Min Price and Max Price. Thus, there are twice as many threshold criteria as the product between the number of customers and the number of products.
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