Implication of ICWFPSO as Optimization Neural Network Algorithm on Sales Forecasting System

Abstract

Predictive systems play a crucial role in a company's operations and strategy by aiding in more informed and data-driven decision-making and more effective planning and budgeting. It is possible to develop an intelligent system to perform forecasting. Neural networks offer significant advantages in forecasting systems due to their flexible modeling capabilities. However, this algorithm's fundamental weakness is the slow convergence rate and being trapped in a local minimum. To overcome it, this research is conducted to optimize the NN algorithm using the ICWFPSO to produce a forecasting algorithm with high accuracy and faster execution time using real e-commerce sales data for the past 7 years. Algorithm performance testing tests the Mean Absolute Error (MAE) value of the forecasting system using three scenarios: the NN forecasting algorithm, the NN optimized with ICWFPSO on the weight value, and the same scheme. Still, the optimized value is the hyperparameter value. ICWPSO has been shown to enhance the performance of PSO by tuning the inertia weight dynamically, which helps balance exploration and exploitation during the optimization process. The best prediction result is obtained when optimizing the hyperparameters using the ICWFPSO optimization technique compared to using traditional NN or optimizing weight value with ICWFPSO with the MAE value of 245.32958984375, and the best performance is obtained at iterations below 100. Further, gradient-based optimization methods might be generally preferred for their efficiency and effectiveness in handling large-scale neural network training.