Demand Forecasting Models for Food Industry by Utilizing Machine Learning Approaches

Abstract

Continued global economic instability and uncer-tainty is causing difficulties in predicting sales. As a result, many sectors and decision-makers are facing new, pressing challenges. In supply chain management, the food industry is a key sector in which sales movement and the demand forecasting for food products are more difficult to predict. Accurate sales forecasting helps to minimize stored and expired items across individual stores and, thus, reduces the potential loss of these expired products. To help food companies adapt to rapid changes and manage their supply chain more effectively, it is a necessary to utilize machine learning (ML) approaches because of ML’s ability to process and evaluate large amounts of data efficiently. This research compares two forecasting models for confectionery products from one of the largest distribution companies in Saudi Arabia in order to improve the company’s ability to predict demand for their products using machine learning algorithms. To achieve this goal, Support Vectors Machine (SVM) and Long Short-Term Memory (LSTM) algorithms were utilized. In addition, the models were evaluated based on their performance in forecasting quarterly time series. Both algorithms provided strong results when measured against the demand forecasting model, but overall the LSTM outperformed the SVM.