A genetic algorithms approach to growth phase forecasting of wireless subscribers

Abstract

In order to effectively make forecasts in the telecommunications sector during the growth phase of a new product life cycle, we evaluate performance of an evolutionary technique: genetic algorithms (GAs), used in conjunction with a diffusion model of adoption such as the Bass model. During the growth phase, managers want to predict (1) future sales per period, (2) the magnitude of sales during peak, and (3) when the industry would reach maturity. At present, reliable estimation of parameters of diffusion models is possible, when sales data includes the peak sales also. Cellular phone adoption data from seven Western European Countries is used in this study to illustrate the benefits of using the new technique. The parameter estimates obtained from GAs exhibit good consistency comparable to NLS, OLS, and a naı̈ve time series model when the entire sales history is considered. When censored datasets (data points available until the inflection point) are used, the proposed technique provides better predictions of future sales; peak sales time period, and peak sales magnitude as compared to currently available estimation techniques.