IDEAS home Printed from https://ideas.repec.org/a/spr/snopef/v3y2022i4d10.1007_s43069-022-00166-4.html
   My bibliography  Save this article

A Comparative Study of Demand Forecasting Models for a Multi-Channel Retail Company: A Novel Hybrid Machine Learning Approach

Author

Listed:
  • Arnab Mitra

    (Delhi Technological University)

  • Arnav Jain

    (Delhi Technological University)

  • Avinash Kishore

    (Delhi Technological University)

  • Pravin Kumar

    (Delhi Technological University)

Abstract

Demand forecasting has been a major concern of operational strategy to manage the inventory and optimize the customer satisfaction level. The researchers have proposed many conventional and advanced forecasting techniques, but no one leads to complete accuracy. Forecasting is equally important in manufacturing as well as retail companies. In this study, the performances of five regression techniques of machine learning, viz. random forest (RF), extreme gradient boosting (XGBoost), gradient boosting, adaptive boosting (AdaBoost), and artificial neural network (ANN) algorithms, are compared with a proposed hybrid (RF-XGBoost-LR) model for sales forecasting of a retail chain considering the various parameters of forecasting accuracy. The weekly sales data of a US-based retail company is considered in the analysis of the forecasts undertaking the attributes affecting the sale such as the temperature of the region and the size of the store. It is observed that the hybrid RF-XGBoost-LR outperformed the other models measured against various metrics of performance. This study may help the industry decision-maker to understand and improve the methods of forecasting.

Suggested Citation

  • Arnab Mitra & Arnav Jain & Avinash Kishore & Pravin Kumar, 2022. "A Comparative Study of Demand Forecasting Models for a Multi-Channel Retail Company: A Novel Hybrid Machine Learning Approach," SN Operations Research Forum, Springer, vol. 3(4), pages 1-22, December.
    • Handle: RePEc:spr:snopef:v:3:y:2022:i:4:d:10.1007_s43069-022-00166-4
    DOI: 10.1007/s43069-022-00166-4
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s43069-022-00166-4
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s43069-022-00166-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Wang, Zhe & Hong, Tianzhen & Piette, Mary Ann, 2020. "Building thermal load prediction through shallow machine learning and deep learning," Applied Energy, Elsevier, vol. 263(C).
    2. Nesreen Ahmed & Amir Atiya & Neamat El Gayar & Hisham El-Shishiny, 2010. "An Empirical Comparison of Machine Learning Models for Time Series Forecasting," Econometric Reviews, Taylor & Francis Journals, vol. 29(5-6), pages 594-621.
    3. Ligang Zhou & Kin Keung Lai, 2017. "AdaBoost Models for Corporate Bankruptcy Prediction with Missing Data," Computational Economics, Springer;Society for Computational Economics, vol. 50(1), pages 69-94, June.
    4. Anirut Kantasa-ard & Maroua Nouiri & Abdelghani Bekrar & Abdessamad Ait el cadi & Yves Sallez, 2021. "Machine learning for demand forecasting in the physical internet: a case study of agricultural products in Thailand," International Journal of Production Research, Taylor & Francis Journals, vol. 59(24), pages 7491-7515, December.
    5. Wang, Lin & Lv, Sheng-Xiang & Zeng, Yu-Rong, 2018. "Effective sparse adaboost method with ESN and FOA for industrial electricity consumption forecasting in China," Energy, Elsevier, vol. 155(C), pages 1013-1031.
    6. Steffen Q. Mueller, 2020. "Pre- and within-season attendance forecasting in Major League Baseball: a random forest approach," Applied Economics, Taylor & Francis Journals, vol. 52(41), pages 4512-4528, September.
    7. Holt, Charles C., 2004. "Forecasting seasonals and trends by exponentially weighted moving averages," International Journal of Forecasting, Elsevier, vol. 20(1), pages 5-10.
    8. Haberleitner, Helmut & Meyr, Herbert & Taudes, Alfred, 2010. "Implementation of a demand planning system using advance order information," International Journal of Production Economics, Elsevier, vol. 128(2), pages 518-526, December.
    9. Li, Chuan & Tao, Ying & Ao, Wengang & Yang, Shuai & Bai, Yun, 2018. "Improving forecasting accuracy of daily enterprise electricity consumption using a random forest based on ensemble empirical mode decomposition," Energy, Elsevier, vol. 165(PB), pages 1220-1227.
    10. Jaehyun Yoon, 2021. "Forecasting of Real GDP Growth Using Machine Learning Models: Gradient Boosting and Random Forest Approach," Computational Economics, Springer;Society for Computational Economics, vol. 57(1), pages 247-265, January.
    11. Sami Ben Jabeur & Salma Mefteh-Wali & Jean-Laurent Viviani, 2021. "Forecasting gold price with the XGBoost algorithm and SHAP interaction values," Post-Print hal-03331805, HAL.
    12. Sushil Punia & Konstantinos Nikolopoulos & Surya Prakash Singh & Jitendra K. Madaan & Konstantia Litsiou, 2020. "Deep learning with long short-term memory networks and random forests for demand forecasting in multi-channel retail," International Journal of Production Research, Taylor & Francis Journals, vol. 58(16), pages 4964-4979, July.
    13. Barrow, Devon K. & Crone, Sven F., 2016. "A comparison of AdaBoost algorithms for time series forecast combination," International Journal of Forecasting, Elsevier, vol. 32(4), pages 1103-1119.
    14. Chih-Hsuan Wang & Yu-Wei Chien, 2016. "Combining balanced scorecard with data envelopment analysis to conduct performance diagnosis for Taiwanese LED manufacturers," International Journal of Production Research, Taylor & Francis Journals, vol. 54(17), pages 5169-5181, September.
    15. Nicholas Ampazis, 2015. "Forecasting Demand in Supply Chain Using Machine Learning Algorithms," International Journal of Artificial Life Research (IJALR), IGI Global, vol. 5(1), pages 56-73, January.
    16. Haidong Huang & Zhixiong Zhang & Fengxuan Song, 2021. "An Ensemble-Learning-Based Method for Short-Term Water Demand Forecasting," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 35(6), pages 1757-1773, April.
    17. Holt, Charles C., 2004. "Author's retrospective on 'Forecasting seasonals and trends by exponentially weighted moving averages'," International Journal of Forecasting, Elsevier, vol. 20(1), pages 11-13.
    18. Haberleitner, H. & Meyr, H. & Taudes, A., 2010. "Implementation of a demand planning system using advance order information," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 48410, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    19. Maia, André Luis Santiago & de Carvalho, Francisco de A.T., 2011. "Holt’s exponential smoothing and neural network models for forecasting interval-valued time series," International Journal of Forecasting, Elsevier, vol. 27(3), pages 740-759.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Md Sabbirul Haque & Md Shahedul Amin & Jonayet Miah, 2023. "Retail Demand Forecasting: A Comparative Study for Multivariate Time Series," Papers 2308.11939, arXiv.org.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xianbo Li, 2022. "Sequence Model and Prediction for Sustainable Enrollments in Chinese Universities," Sustainability, MDPI, vol. 15(1), pages 1-25, December.
    2. Tianxiang Zhan & Fuyuan Xiao, 2021. "A Fast Evidential Approach for Stock Forecasting," Papers 2104.05204, arXiv.org, revised Jul 2021.
    3. Dabin Zhang & Qian Li & Amin W. Mugera & Liwen Ling, 2020. "A hybrid model considering cointegration for interval‐valued pork price forecasting in China," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 39(8), pages 1324-1341, December.
    4. Paweł Ziemba & Aneta Becker & Jarosław Becker, 2021. "Forecasting and Assessment of the Energy Security Risk in Fuzzy Environment," Energies, MDPI, vol. 14(18), pages 1-20, September.
    5. Petropoulos, Fotios & Apiletti, Daniele & Assimakopoulos, Vassilios & Babai, Mohamed Zied & Barrow, Devon K. & Ben Taieb, Souhaib & Bergmeir, Christoph & Bessa, Ricardo J. & Bijak, Jakub & Boylan, Joh, 2022. "Forecasting: theory and practice," International Journal of Forecasting, Elsevier, vol. 38(3), pages 705-871.
      • Fotios Petropoulos & Daniele Apiletti & Vassilios Assimakopoulos & Mohamed Zied Babai & Devon K. Barrow & Souhaib Ben Taieb & Christoph Bergmeir & Ricardo J. Bessa & Jakub Bijak & John E. Boylan & Jet, 2020. "Forecasting: theory and practice," Papers 2012.03854, arXiv.org, revised Jan 2022.
    6. Svetunkov, Ivan & Kourentzes, Nikolaos, 2015. "Complex Exponential Smoothing," MPRA Paper 69394, University Library of Munich, Germany.
    7. Simona Mikšíková & David Ulčák & František Kuda, 2022. "Analysis of Malfunctions in Selected Parking Systems in the Czech Republic," Sustainability, MDPI, vol. 14(3), pages 1-10, February.
    8. Dyna Heng & Anna Ivanova & Rodrigo Mariscal & Ms. Uma Ramakrishnan & Joyce Wong, 2016. "Advancing Financial Development in Latin America and the Caribbean," IMF Working Papers 2016/081, International Monetary Fund.
    9. Meira, Erick & Cyrino Oliveira, Fernando Luiz & de Menezes, Lilian M., 2022. "Forecasting natural gas consumption using Bagging and modified regularization techniques," Energy Economics, Elsevier, vol. 106(C).
    10. Karzan Mahdi Ghafour & Abdulqadir Rahomee Ahmed Aljanabi, 2023. "The role of forecasting in preventing supply chain disruptions during the COVID-19 pandemic: a distributor-retailer perspective," Operations Management Research, Springer, vol. 16(2), pages 780-793, June.
    11. Koopman, Siem Jan & Ooms, Marius, 2006. "Forecasting daily time series using periodic unobserved components time series models," Computational Statistics & Data Analysis, Elsevier, vol. 51(2), pages 885-903, November.
    12. Kosuke Kawakami & Hirokazu Kobayashi & Kazuhide Nakata, 2021. "Seasonal Inventory Management Model for Raw Materials in Steel Industry," Interfaces, INFORMS, vol. 51(4), pages 312-324, July.
    13. Andrea Kolková & Petr Rozehnal, 2022. "Hybrid demand forecasting models: pre-pandemic and pandemic use studies," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 17(3), pages 699-725, September.
    14. Kim, Sungil & Kim, Heeyoung, 2016. "A new metric of absolute percentage error for intermittent demand forecasts," International Journal of Forecasting, Elsevier, vol. 32(3), pages 669-679.
    15. Theresa Maria Rausch & Tobias Albrecht & Daniel Baier, 2022. "Beyond the beaten paths of forecasting call center arrivals: on the use of dynamic harmonic regression with predictor variables," Journal of Business Economics, Springer, vol. 92(4), pages 675-706, May.
    16. Xi Wu & Adam Blake, 2023. "The Impact of the COVID-19 Crisis on Air Travel Demand: Some Evidence From China," SAGE Open, , vol. 13(1), pages 21582440231, January.
    17. Wolfram Rozas & Rafael Pastor-Vargas & Angel Miguel García-Vico & José Carpio, 2023. "Consumption–Production Profile Categorization in Energy Communities," Energies, MDPI, vol. 16(19), pages 1-27, October.
    18. Kang, Wensheng & Ratti, Ronald. A. & Vespignani, Joaquin, 2016. "The implications of liquidity expansion in China for the US dollar," Working Papers 2016-02, University of Tasmania, Tasmanian School of Business and Economics.
    19. Ching-Chih Chang & Yu-Wei Chang & Po-Chien Huang, 2022. "Effects of the INDC and GGRMA Regulations on the Impact of PM 2.5 Particle Emissions on Maritime Ports: A Study of Human Health and Environmental Costs," Sustainability, MDPI, vol. 14(10), pages 1-15, May.
    20. Isra Al-Turaiki & Fahad Almutlaq & Hend Alrasheed & Norah Alballa, 2021. "Empirical Evaluation of Alternative Time-Series Models for COVID-19 Forecasting in Saudi Arabia," IJERPH, MDPI, vol. 18(16), pages 1-19, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:snopef:v:3:y:2022:i:4:d:10.1007_s43069-022-00166-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.