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Identification of the Demand Curve and Forecasts in Subsequent Periods Using the Metropolis-Hastings Algorithm

Author

Listed:
  • Lukasz Golabek
  • Konrad Gauda
  • Krzysztof Zuk
  • Edward Kozlowski

Abstract

Purpose: The main purpose of the article is to identify the demand curve and to forecast demand in subsequent periods using the Metropolis-Hastings algorithm. Design/Methodology/Approach: The Metropolis-Hastings algorithm belonging to the Markov Chain Monte Carlo was used to identify the demand curve and to forecast the demand in subsequent periods. This method consists in generating (drawing) a sample in accordance with the modified distribution and the possibility of rejecting a new sample in case of insufficient improvement of the quality index. Findings: The results of the conducted research indicate that the presented solution of generating a sample in accordance with the modified distribution and the possibility of rejecting a new sample in the event of insufficient improvement of the quality index is effective in identifying and forecasting the demand. Practical Implications: The algorithm presented in the article can be used to forecast stays taking into account the product life curve. Originality/Value: A novelty is the use of the Metropolis-Hastings algorithm to identify the demand curve and the forecast of demand in subsequent periods to determine the strategy of long-term products by analyzing the sales volume of the product.

Suggested Citation

  • Lukasz Golabek & Konrad Gauda & Krzysztof Zuk & Edward Kozlowski, 2021. "Identification of the Demand Curve and Forecasts in Subsequent Periods Using the Metropolis-Hastings Algorithm," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 2), pages 523-533.
    • Handle: RePEc:ers:journl:v:xxiv:y:2021:i:special2:p:523-533
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    More about this item

    Keywords

    Machine learning; Markov Chain Monte Carlo; Metropolis-Hastings algorithm; forecasting.;
    All these keywords.

    JEL classification:

    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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