Fuel Pricing Optimization

Retail customers leverage machine learning to maximize margin with optimized pricing

Accelerate the time from PoV to Production

With DataRobot, the Daugherty data scientists are able to focus on feature development and model analysis, while testing large number of models quickly. The time for model acceptance to production is drastically reduced with the push of a button deployment functionality and automatically created API endpoint for production scoring.

End-to-end AI Experience for Customers

Regardless of where you are on the journey to leverage data and machine learning to drive business outcome, Daugherty provides talents in data science, data engineering, software engineering and business consulting to meet where you are and help you develop end-to-end machine learning solutions with DataRobot.

Provide guidance to customers and increase the organizational AI maturity

To help you embed AI through your organization, Daugherty helps to train your team on operating and developing AI and prepare your organization to be AI-driven.

How it Works

The solution considers various types of source data, including fuel supply volume, market demand, competition pricing and response. With exogenous data such as fuel station distance to nearest highway exit, distance to the nearest competition, weather, relative pricing to nearby stations, and others to build machine learning models and maximize margin to determine the optimal pricing, the solution uses the following steps:

  • Forecast volume at different price points
  • Combine the margin across channels and optimize
  • Constrain prices within an acceptable window
  • Grid search across prices to maximize

Business rules are implemented as additional guardrails to constrain the minimal price and maximal price gap above competitors. The prices can be optimized for each individual station on a desired schedule.

We can take one step further to analyze and model the customer behavior using other services in the fuel station, such as purchase in convenience stores, restaurants and truck services. Machine learning models are able to predict sales, next purchase, common combined purchases, and generate insights to what factors impact the customer behavior, to help further improve the revenue of each station.

A similar approach can be applied to all retail pricing optimization use cases across different industries.

Key Deliverables

We’re excited to provide you with these key deliverables and ensure your experience with us is nothing short of exceptional. Your success is our priority, and we’re here to make it happen!

Please customize this list based on your specific services and offerings, and feel free to reach out if you need any further assistance!

  • Strategy & roadmaps session to identify, uncover and prioritize AI-driven projects organization-wide such as:
    • Prioritize, rank order and map AI opportunities on value and feasibility dimensions, identifying top ideas for execution
    • Develop execution roadmaps (milestones, timelines, etc.) that includes both short-term and long-term, high value opportunities
  • Automated optimization engines to set fuels prices with desired price update schedule, leveraging all data available and refreshed, including supply volume, market demand, weather, holiday, events, competitor pricing and anticipated pricing change, etc. The engine also predicts sales volume for each fuel station.
  • UI interface with data streams to access data and operationalize pricing recommendations
  • Measures business value and success of the solution with following metrics:
    • Model accuracy
    • Year over year revenue and margin improvement
    • A/B testing to compare results for fuel stations using the model against similar stations do not use the model

About the Partner

Daugherty understands the landscape of competitive pricing and supplier market dynamics, and at the heart of it is a need for data insight and advanced data science capabilities. To succeed at best-in-class fuel pricing solutions requires the ability to deliver rapid insights from data and the need to make fast and accurate predictions. Daugherty is uniquely positioned to leverage thought leadership as well as breadth of experiences and depth in delivering differentiation business outcomes leveraging data science.

Daugherty offers strategy & roadmap sessions, short proof of concept engagements to help demonstrate the value of AI, and full solution execution services to deliver it in production and integrate with your tech stack. Daugherty also helps to train and develop your team’s AI maturity to be able to operate and develop AI solutions in the future.

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Solution Diagram

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Success Story

One of the US’s top operators of truck stops uses the solution to optimize fuel prices for each of the several hundreds of their stations. Fuel prices for each station are updated twice daily, using the predictions from machine learning models customized for each station.

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