Designing database for mining purchase dependency.

Author:Bala, Pradip Kumar

    Dependency of purchase of an item or a set of items by a retail customer on the purchase of another item or a set of items by the same customer is known as purchase dependency[Bala (2008-a)].Purchase dependency is generally seen within the same transaction of a customer. Sometimes, purchase dependency can be inter-transactional also, where purchase of item or items in a transaction by a customer depends on the purchase of item or items in a previous transaction by him or her. In this research paper, we have focussed on purchase dependency in same transaction. Purchase dependencies are of tremendous importance in designing inventory replenishment policies [Bala (2009)].

    Let us consider an example of purchase dependency in retail sale where the purchase of an item, y, depends on the purchase of another item, x. In other words, some of the purchases (or, all purchases) of y depend on the purchase of x. With such purchase dependency, there is a chance that a customer intends to purchase y whenever he/she purchases x. In other words, purchase of x gives rise to purchase of y. In fact, in many cases, y is purchased only when x is also purchased. Hence, out-of-stock situation of x may result in non-purchase of y in many cases, even if y is in stock. It will result in lost sale of not only x but also of y. This will also give rise to inventory holding cost of y as it remains in stock but does not sell in many cases due to purchase dependency on x.

    Almost all multi-echelon inventory models assume that demands which are not satisfied immediately can be backordered in some cases. However, according to Jokar & Zangeneh (2006), this assumption is not realistic in many situations. For example, while modeling for inventory in a retail store when the retailers are in a competitive market and customers can easily turn to another retailer for purchasing goods, stockout results in a lost sale. Hence, unsatisfied demands result in lost sale in retail sale. Knowledge of purchase dependency can be used as an additional input in designing inventory replenishment policy with better profitability and lesser cost of inventory operations. Effective promotional offers can be designed for the products with the knowledge of purchase dependencies. Purchase dependencies of the items can also be used as additional information for shelf designing in retail stores. Hence, identification of purchase dependencies in retail sale is an important activity which has remained mostly unaddressed. A few works focus on identifying demand dependency in limited extent with a few items. Demand dependency is different from purchase dependency as the former says about the relationship between or amongst the periodic demands of the items, whereas the later talks about...

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