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On the identification of sales forecasting models in the presence of promotions
Universidad de Castilla-La Mancha, Ciudad Real, Spain.
Lancaster University, Lancaster, United Kingdom.ORCID iD: 0000-0003-0211-5218
Lancaster University, Lancaster, United Kingdom.
2015 (English)In: Journal of the Operational Research Society, ISSN 0160-5682, E-ISSN 1476-9360, Vol. 66, no 2, p. 299-307Article in journal (Refereed) Published
Abstract [en]

Shorter product life cycles and aggressive marketing, among other factors, have increased the complexity of sales forecasting. Forecasts are often produced using a Forecasting Support System that integrates univariate statistical forecasting with managerial judgment. Forecasting sales under promotional activity is one of the main reasons to use expert judgment. Alternatively, one can replace expert adjustments by regression models whose exogenous inputs are promotion features (price, display, etc). However, these regression models may have large dimensionality as well as multicollinearity issues. We propose a novel promotional model that overcomes these limitations. It combines Principal Component Analysis to reduce the dimensionality of the problem and automatically identifies the demand dynamics. For items with limited history, the proposed model is capable of providing promotional forecasts by selectively pooling information across established products. The performance of the model is compared against forecasts provided by experts and statistical benchmarks, on weekly data; outperforming both substantially.

Place, publisher, year, edition, pages
Taylor & Francis, 2015. Vol. 66, no 2, p. 299-307
Keywords [en]
demand forecasting, judgmental adjustments, principal components analysis, Promotional modelling, Benchmarking, Forecasting, Life cycle, Regression analysis, Sales, Forecasting support system, Multicollinearity, Product life cycles, Promotional activities, Statistical forecasting, Principal component analysis
National Category
Probability Theory and Statistics Water Engineering Transport Systems and Logistics
Identifiers
URN: urn:nbn:se:his:diva-18251DOI: 10.1057/jors.2013.174ISI: 000348484200010Scopus ID: 2-s2.0-84920507031OAI: oai:DiVA.org:his-18251DiVA, id: diva2:1402524
Available from: 2020-02-28 Created: 2020-02-28 Last updated: 2020-02-28Bibliographically approved

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Kourentzes, Nikolaos

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CiteExportLink to record
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  • apa
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  • modern-language-association-8th-edition
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  • de-DE
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  • en-US
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  • nn-NO
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Output format
  • html
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