Optimizing Inventory in Convenience Stores to Maximize ROI Using Random Forest and Genetic Algorithms

Background : Convenience stores face volatile demand and a direct trade-off between stock-outs and overstocking, both of which affect service levels and profitability. This study aims to optimize inventory management through a reproducible forecasting-and-optimization workflow, assessing its impact on return on investment (ROI) and operational metrics, such as fill rate and stockouts. Methods : The workflow integrates daily, store-level transactions with external covariates, constructs temporal and lag features, and trains a Random Forest (RF) model using chronological splitting and time-series validation. Daily forecasts are then aggregated to the monthly level and used as inputs to an inventory simulation and an ROI-based economic model. Building on this simulation, a Genetic Algorithm (GA) optimizes the parameters of a monthly replenishment policy, incorporating minimum-coverage constraints. Results : In testing, the forecasting model achieved a mean absolute percentage error (MAPE) below 13%, and the RF+GA scheme outperformed the 28-day moving average baseline (MA28) in ROI across all five stores, with an average improvement of 4.52 percentage points; statistical significance was confirmed using the Wilcoxon test. Conclusions : Overall, the RF+GA approach serves as a decision-support tool that generates monthly order quantities consistent with demand and operational constraints, delivering verifiable improvements in both economic and service metrics.