DEMAND FORECASTING FOR PERISHABLE SHORT SHELF-LIFE

HOMEMADE FOOD AT iD FRESH FOOD

1. What are the business problems of iD Fresh Food and what are the
corresponding analytics problem?

 Business Problems:
a) Forecasting their daily production demand to ensure an optimum level of
production so that they can serve their retail stores daily and increase their
SKU velocity.
b) Perishable short life span of the products they offer
c) Reliance on their own sales team rather than third party sales team
d) Competition from local stores in Pune and Mumbai
e) Lack of incentives that retailers received to promote Id products
f) Higher return ration in a few markets such as Pune
 Analytical Problems:
a) How much quantity of SKU to load each day in a vehicle for each store
b) Lack of information regarding returned items. There was no data on returns
due to defects or expiry.
c) Lack of information regarding stock out. It was only inferred.

2. The dataset has missing information. How best to handle missing data?
 Large Dataset: Ignore the missing records
 Small Dataset: Fill the missing information with mean of the attributes

3. Check for the outliers in the data. How would you handle it?
 Filter out outliers if that dataset is large
 Substitute mild outliers with mean values
 Quantile based flooring and capping
 Some inputs from our analysis of ID Foods Test Data mentioned below:
o Yes, we have outliers three outlier in the test data provided (62, 67 &
85). Including Outliers, we have an average sale of $152.53, while
excluding them would give us average sales of $161.56
o The three outliers we have were recorded on three consecutive
Mondays of November 2015. (sales figures for the previous Monday
19th November 2015 was also relatively low – 119 units) – This is a
potential indicator that the sales of ID Food products are relatively low
on Mondays
o As we are getting higher deviation in average sales while including
outlier data as compared to excluding outlier data for November 2015,
we can omit the outlier data from our analysis

4. Forecasting at store level or aggregate level?

Forecasting is performed at aggregate level.
FORECAST DEMAND DATA OF ID FOOD FOR NOV, 2015:

Forecasted demand
Sales Beat 81
SKU 95
DATE Regression
3-Days (Actual test
Weighed Moving Exponential smoothing model
Moving demand)
Average (0.6, 0.3, 0.1) method (alpha = 0.2) (Y = 0.0673X +
Average
159.1)
01-11-2015 161.33 163.2 171.20 165.36 168
02-11-2015 165.11 163.32 162.24 165.43 126
03-11-2015 162.15 162.952 169.41 165.49 164
04-11-2015 162.86 163.09 163.67 165.56 171
05-11-2015 163.37 163.07 168.26 165.63 137
06-11-2015 162.80 163.06 164.59 165.70 165
07-11-2015 163.01 163.07 167.53 165.76 178
08-11-2015 163.06 163.07 165.18 165.83 167
09-11-2015 162.96 163.07 167.06 165.90 119
10-11-2015 163.01 163.07 165.55 165.96 146
11-11-2015 163.01 163.07 166.76 166.03 143
12-11-2015 162.99 163.07 165.79 166.10 137
13-11-2015 163.00 163.07 166.56 166.17 159
14-11-2015 163.00 163.07 165.95 166.23 179
15-11-2015 163.00 163.07 166.44 166.30 195
16-11-2015 163.00 163.07 166.05 166.37 67
17-11-2015 163.00 163.07 166.36 166.44 147
18-11-2015 163.00 163.07 166.11 166.50 141
19-11-2015 163.00 163.07 166.31 166.57 171
20-11-2015 163.00 163.07 166.15 166.64 149
21-11-2015 163.00 163.07 166.28 166.70 206
22-11-2015 163.00 163.07 166.18 166.77 176
23-11-2015 163.00 163.07 166.26 166.84 62
24-11-2015 163.00 163.07 166.19 166.91 174
25-11-2015 163.00 163.07 166.25 166.97 167
26-11-2015 163.00 163.07 166.20 167.04 151
27-11-2015 163.00 163.07 166.24 167.11 154
28-11-2015 163.00 163.07 166.21 167.18 178
29-11-2015 163.00 163.07 166.23 167.24 194
30-11-2015 163.00 163.07 166.21 167.31 85

Based on the forecast data we can conclude that predicated demand for ID food in
November month is nearly equal in all 4 methods in the approximate range of 161 to
167. These forecast data did not consider the outlier demand of the month. To
analyse 3 outliers (62,67 & 85) on 3 consecutive Monday of the month, a qualitative
method of forecasting will be useful.
ID needs to do store level forecasting to meet the required demand.
Assignment by Section02 -Group 07
Nayana Bino – FT232024
Gokul K S – FT232045
Shobhit Vijaivergia – FT232047
P Sachin Prasad – FT232049
Karthick Prabu A K – FT232052
Rohit Gupta – FT232062