Heuristic Approach for Demand Forecasting under the Impact of Promotions

A Balance between the demand and supply is one of the indicator of the position of your organization in the Market. Every organization tries to match their supply with the demand. However, balancing between the two is highly impossible because of the changing customer requirements. Retail stores whose customer are the end users is very dynamic system as it is prone to the fluctuations immediately. Hence balancing the supply and demand is very difficult. Forecasting the demand of products helps in making products available readily. If there are no changes in demand, forecasting the future demand would be very easy. However, in this uncertain environment this is a complicate work. Forecasting the demand of products when promotions are offered is a crucial step as maintaining high inventory would increase inventory cost and less inventory would lead to losing the customers. Time series method are the best techniques available for forecasting the demand when subjected to constraints. However, while considering a new variable, promotions these methods are not effective. Support Vector regression(SVR) is one such method that will produce the forecast the demand based on the different type of promotions planned by the stores Key words— Support Vector regression, MAPE, Simple moving average, Weighted moving average, MAD, Retail stores, Demand forecast.