In this paper, historical data from a wholesale alcoholic beverage distributor was used to forecast sales demand. Demand forecasting is a vital part of the sale and distribution of many goods. Accurate forecasting can be used to optimize inventory, improve cash ow, and enhance customer service. However, demand forecasting is a challenging task due to the many unknowns that can impact sales, such as the weather and the state of the economy. While many studies focus effort on modeling consumer demand and endpoint retail sales, this study focused on demand forecasting from the distributor perspective. An ensemble approach was applied using traditional statistical univariate time series models, multivariate models, and contemporary deep learning-based models. The final ensemble models for the most sold product and highest revenue grossing product were able to reduce sales forecasting error by nearly 50% and 33.5%, respectively, in comparison to a statistical naive model. Additionally, this paper determined that there is no "one size fits all" demand model for all products sold by the distributor; each product needs an individually tuned model to meaningfully reduce error.
Arora, Tanvi; Chandna, Rajat; Conant, Stacy; Sadler, Bivin; and Slater, Robert
"Demand Forecasting In Wholesale Alcohol Distribution: An Ensemble Approach,"
SMU Data Science Review: Vol. 3:
1, Article 7.
Available at: https://scholar.smu.edu/datasciencereview/vol3/iss1/7
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Longitudinal Data Analysis and Time Series Commons, Multivariate Analysis Commons, Operations and Supply Chain Management Commons, Statistical Methodology Commons, Statistical Models Commons