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Predictive Inventory Management for Retail

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Pavithran
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2 views4 pages

Predictive Inventory Management for Retail

Uploaded by

Pavithran
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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PREDICTIVE INVENTORY MANAGEMENT FOR RETAIL

INTRODUCTION:

⦁ In the realm of retail, effective inventory management is crucial for


maintaining profitability and customer satisfaction.

⦁ predictive inventory levels, anticipate demand, and minimize stockouts.

⦁ This paper presents a comprehensive framework for predictive inventory


management tailored to the dynamic nature of retail operations.

OBJECTIVES:

⦁ Develop a robust predictive model capable of forecasting demand accurately.

⦁ Optimize algorithm selection to suit the specific needs of retail inventory


management.

⦁ Train the model using historical data to capture patterns and trends.

⦁ Evaluate the model's performance using a variety of metrics to ensure


effectiveness.

⦁ Analyze the impact of predictive inventory management on accuracy, ranking,


diversity, and novelty metrics.

⦁ Provide insights and recommendations for implementing predictive inventory


management systems in retail settings.

MODEL DEVELOPMENT

Algorithm Selection:

⦁ Choosing the right algorithms is critical for building an effective predictive


inventory management system.
⦁ This involves considering factors such as data complexity, scalability, and
interpretability.
⦁ Algorithms like ARIMA, SARIMA, LSTM, and Random Forests are commonly
employed in forecasting demand for retail inventory.
Model Training:
The selected algorithms are trained using historical sales data, incorporating features
such as seasonality, trends, and external factors like promotions or holidays.
Ensemble techniques and hyperparameter tuning may be employed to enhance model
performance.

Model Evaluation:

⦁ The performance of the model is evaluated using various metrics, including


accuracy, ranking, diversity, and novelty metrics.

Evaluation Metrics:

Accuracy Metrics:

> Mean Absolute Error (MAE > Mean Squared Error (MSE)
> Root Mean Squared Error (RMSE)
> Mean Absolute Percentage Error (MAPE)

RANKING METRICS:

> Mean Absolute Rank Error (MARE)


> Kendall's
> Spearman's Rank Correlation Coefficient

Diversity Metrics:

> Gini Index


> Entropy
> Herfindahl Index

Novelty Metrics:

> Mean Reciprocal Rank (MRR)


> Novelty@k

CONCLUSION:
⦁ Predictive inventory management offers significant advantages for retail operations,
including improved forecasting accuracy, optimized inventory levels, and enhanced customer
satisfaction.
⦁ By leveraging advanced analytics and evaluating performance across various
metrics, retailers can gain valuable insights into their inventory management strategies and
drive sustainable growth in a competitive market landscape.

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