Demand Forecasting Engine
Overview
The Demand Forecasting Engine provides comprehensive statistical and machine learning-based demand forecasting capabilities. It supports multiple forecasting algorithms with automatic model selection, ensemble averaging, and continuous accuracy tracking to generate reliable demand predictions for supply chain planning.
Capabilities
- •Time Series Forecasting: ARIMA, exponential smoothing, Holt-Winters methods
- •Machine Learning Models: XGBoost, LSTM neural networks for complex demand patterns
- •Causal Factor Integration: Incorporate promotions, seasonality, trends, and external drivers
- •Demand Sensing: Short-term signal incorporation for near-term forecast adjustment
- •Accuracy Metrics: MAPE, WMAPE, bias calculation and tracking
- •Automatic Model Selection: Best-fit algorithm selection based on data characteristics
- •Ensemble Averaging: Combine multiple model outputs for improved accuracy
- •Confidence Intervals: Generate prediction intervals for uncertainty quantification
- •Forecast Value-Add (FVA) Analysis: Measure contribution of each forecasting step
Input Schema
yaml
forecast_request:
sku_ids: array[string] # SKUs to forecast
historical_data: object # Historical demand data
forecast_horizon: integer # Periods to forecast
granularity: string # daily, weekly, monthly
causal_factors: # Optional external factors
promotions: array
seasonality: object
trends: object
models_to_evaluate: array # Optional specific models
confidence_level: float # e.g., 0.95 for 95% CI
Output Schema
yaml
forecast_output:
forecasts: array
- sku_id: string
predictions: array[object]
confidence_intervals: object
selected_model: string
accuracy_metrics: object
model_comparison: object
recommendations: array
Usage
Generate SKU-Level Forecast
code
Input: Historical sales data for SKU-12345, 12-month forecast horizon Process: Evaluate ARIMA, Holt-Winters, XGBoost models Output: Monthly forecasts with confidence intervals and best model selection
Promotional Demand Planning
code
Input: Base demand + planned promotions calendar Process: Adjust baseline with promotional lift factors Output: Promotion-adjusted forecast with uplift quantification
Multi-Model Ensemble
code
Input: Complex demand pattern with multiple seasonalities Process: Run multiple models and create weighted ensemble Output: Ensemble forecast with individual model contributions
Integration Points
- •ERP Systems: SAP, Oracle for historical demand data
- •Planning Platforms: o9 Solutions, Kinaxis, Blue Yonder
- •Data Sources: POS systems, channel inventory data
- •Tools/Libraries: Prophet, statsmodels, scikit-learn, TensorFlow/PyTorch, pandas
Process Dependencies
- •Demand Forecasting and Planning
- •Sales and Operations Planning (S&OP)
- •Forecast Accuracy Analysis and Improvement
Best Practices
- •Ensure sufficient historical data (minimum 2 years for seasonal patterns)
- •Cleanse outliers before model training
- •Validate forecasts against holdout periods
- •Document model selection rationale
- •Track forecast accuracy over time for continuous improvement
- •Consider demand segmentation for heterogeneous portfolios