Managing inventory of perishable goods such as fruits and vegetables is a difficult task for big
retail stores as these items have a very short shelf life. If not managed properly, excessive stock
may result in loss of inventory, but at the same time under stocking may result in lost sales. In
this project we are trying to accurately forecast the demand for 4 SKUs - apple, banana, onion
The consumer products sector faces volatility in demand on a high scale and level of complexity, thereby posing challenges in the area of inventory management. Economic volatility and demand variability present challenges that simple models of demand forecasts are not equipped to handle. An important method of tacking demand variability is an effective way to improve the inventory control policy, which should be designed to smoothen stocking response to demand variation arising from the customers.
The profitability of a supermarket is largely determined by efficient product display within promotional
bins and shelf displays. Hence it can be argued that a sustainable competitive advantage can be
achieved if demand of particular products could be accurately forecasted to allow for a customized
Prof. Galit Shmueli, Institute of Service Science, College of Technology Management, National Tsing Hua University, 101 Kuang Fu Road Sec. 2, Hsinchu 30013 Taiwan
