Demand Forecasting in Practice
Retailers love to sell as many goods as possible, but they also fear high holding costs for unsold inventory. By leveraging demand forecasting, one can stock items just enough for the demand. Maintain lowest inventory level to meet the expected customer service level. (Seaman|WalmartLabs) where the expected customer service level comes demand forecasting. Service providers (e.g., food delivery, taxi, call center) have similar needs. Instacart scheduled drivers based on forecasted demand, so that customers can get their grocery delivered, and shoppers can be well-utilized (Putrevu|Instacart, Deng|Instacart). Similarly, Uber directed drivers to areas with high forecasted demand so that both drivers and customer benefit (Bell|Uber). In a nutshell Demand forecasting is commonly applied for the purpose of sustainable growth. Evaluating Forecasting Models Let’s first discuss how to measure a forecasting model. I...