Neural Networks for Retail Sales Forecasting

Abstract

Forecasting of the future demand is central to the planning and operation of retail business at both macro and micro levels. At the organizational level, forecasts of sales are needed as the essential inputs to many decision activities in various functional areas such as marketing, sales, production/purchasing, as well as finance and accounting (Mentzer & Bienstock, 1998). Sales forecasts also provide basis for regional and national distribution and replenishment plans. The importance of accurate sales forecasts to efficient inventory management has long been recognized. In addition, accurate forecasts of retail sales can help improve retail supply chain operation, especially for larger retailers who have a significant market share. For profitable retail operations, accurate demand forecasting is crucial in organizing and planning purchasing, production, transportation, labor force, as well as after sales services.