Hard versus Soft Rules

Hard Rules: These are strict, non-negotiable rules that LPO must always enforce. If a price recommendation violates a hard constraint, it will be rejected or adjusted to comply.

Example: A minimum margin rule (ensuring at least a 10% profit margin) must always be met, even if it conflicts with a competitor price match.

Soft Rules: These are flexible guidelines that LPO tries to satisfy, but they can be overridden if necessary to meet other critical objectives.

Example: A competitor match rule may suggest lowering the price to align with a competitor, but if it conflicts with a hard margin constraint, LPO will prioritize profitability over competitor alignment.

How LPO Enforces Hard and Soft Rules

LPO always enforces hard constraints, ensuring that mandatory rules such as legal price limits or minimum margins are never violated. All soft constraints are also evaluated, with the system attempting to satisfy them wherever possible, especially when aligned with high priority rules. The optimization process aims to minimize violations and deliver the best feasible solution within the defined rule framework.