Method and apparatus for modeling a business processes

#This invention relates to the field of business processes. In particular, this invention is drawn to predicting the economic impact of changes in business policies.

#Businesses must be able to accurately predict or forecast events that affect the economic state of the business. Accurately predicting demand for a product, for example, is necessary in order to match production with demand. Underestimating demand results in lost sales. Overestimation of demand results in unrealized sales and associated carrying costs. Changes in business policies may undesirably impact the actual demand and the certainty of any predictions in demand and thus the financial state of the business.

#Types of policy changes that can result in changes to the financial state of the business include but are not limited to sales pricing changes, advertising changes, and return policy changes. Lowering the price of the product directly, providing a rebate to the customer, or providing financial incentives to the seller are examples of sales techniques that may affect sales, returns, and profits. Accurately predicting the effect of policy changes is critical to the financial well-being of the business. Ideally the business would like to accurately predict consumer behavior with respect to its services or products in view of sales, advertising, returns, rebate, warranty, or other policies.

#The present invention is illustrated by way of example and not limitation in the figures of the accompanying drawings, in which like references indicate similar elements and in which:

#FIG. 1 illustrates a system architecture for predicting the effect of policy changes on business processes.

#FIG. 2 illustrates interaction between the business model definition process and the script translation module in greater detail.

#In order to conduct experiments to predict economic behavior in an environment of changing business policies, a test environment specifying the initial economic conditions, preferences, and costs associated with the exchange of goods or services for monetary value is established as well as the economic metrics and characteristics of the simulation participants. The environment includes human subjects who are controlled through the use of monetary or other financial rewards in order to drive their decisions with proper incentives.

#FIG. 1 illustrates a business process modeling system. Business information database 110 provides business information to the business model definition process 120. The business model definition module determines the institution or language of market communication including bids, offers, and acceptances. The institution defines the rules governing the exchange of information and the rules under which communications become binding contracts.

#The business model definition process maps the actual business environment into eight elements: a) decision-making entities (i.e., players), b) game rules, c) possible decision space, d) business variables, e) business process flow (i.e., decision-making process tree), f) information set, g) outcome function, and h) payoff function. The terms “system,” “economics system,” and “environment” will be used interchangeably to describe a system of interacting decision-makers that operate under a set of game rules. The system includes the players, the game rules, the decision space, decision-making process tree, information set, outcome function, and payoff function.