Regresar

Forecast UPC-level FMCG demand, Part III: Grouped reconciliation

Abstract:

Coordination across a supply chain creates win-win situation for all players in that supply chain; we address the benefits, in terms of forecast accuracy, of reconciling demand forecasts across a supply chain. In Part III of this three-part paper, we continue our discussion on optimal reconciliation of forecasts. Two contributions are made in this paper: 1) the grouped reconciliation technique is used to address the forecast inconsistency in situations when more than one hierarchy can be defined in a supply chain, and 2) minimum trace (MinT) estimator is used to further improve the reconciliation accuracy on top of the weighted least square (WLS) approach, which was used in the earlier parts of this three-part paper. Following the earlier works, the same set of fast moving consumer goods data is used here. The current results are compared to the previous ones. It is shown that the MinT reconciliation technique outperforms the WLS approach, which has been previously identified as the best reconciliation technique for the data from the bottled juice category in the Dominick's Finer Food dataset.