Forecasting is the process of making predictions of the future based on past and present data and most commonly by analysis of trends. (Wikipedia)
Petropoulos, Fotios, Apiletti, Daniele, Assimakopoulos, Vassilios, Babai, Mohamed Zied, Barrow, Devon K., Taieb, Souhaib Ben, Bergmeir, Christoph, Bessa, Ricardo J., Bijak, Jakub, Boylan, John E., Browell, Jethro, Carnevale, Claudio, Castle, Jennifer L., Cirillo, Pasquale, Clements, Michael P., Cordeiro, Clara, Oliveira, Fernando Luiz Cyrino, De Baets, Shari, Dokumentov, Alexander, Ellison, Joanne, Fiszeder, Piotr, Franses, Philip Hans, Frazier, David T., Gilliland, Michael, Gönül, M. Sinan, Goodwin, Paul, Grossi, Luigi, Grushka-Cockayne, Yael, Guidolin, Mariangela, Guidolin, Massimo, Gunter, Ulrich, Guo, Xiaojia, Guseo, Renato, Harvey, Nigel, Hendry, David F., Hollyman, Ross, Januschowski, Tim, Jeon, Jooyoung, Jose, Victor Richmond R., Kang, Yanfei, Koehler, Anne B., Kolassa, Stephan, Kourentzes, Nikolaos, Leva, Sonia, Li, Feng, Litsiou, Konstantia, Makridakis, Spyros, Martin, Gael M., Martinez, Andrew B., Meeran, Sheik, Modis, Theodore, Nikolopoulos, Konstantinos, Önkal, Dilek, Paccagnini, Alessia, Panagiotelis, Anastasios, Panapakidis, Ioannis, Pavía, Jose M., Pedio, Manuela, Pedregal, Diego J., Pinson, Pierre, Ramos, Patrícia, Rapach, David E., Reade, J. James, Rostami-Tabar, Bahman, Rubaszek, Michał, Sermpinis, Georgios, Shang, Han Lin, Spiliotis, Evangelos, Syntetos, Aris A., Talagala, Priyanga Dilini, Talagala, Thiyanga S., Tashman, Len, Thomakos, Dimitrios, Thorarinsdottir, Thordis, Todini, Ezio, Arenas, Juan Ramón Trapero, Wang, Xiaoqian, Winkler, Robert L., Yusupova, Alisa, Ziel, Florian
Forecasting has always been at the forefront of decision making and planning. The uncertainty that surrounds the future is both exciting and challenging, with individuals and organisations seeking to minimise risks and maximise utilities. The large number of forecasting applications calls for a diverse set of forecasting methods to tackle real-life challenges. This article provides a non-systematic review of the theory and the practice of forecasting. We provide an overview of a wide range of theoretical, state-of-the-art models, methods, principles, and approaches to prepare, produce, organise, and evaluate forecasts. We then demonstrate how such theoretical concepts are applied in a variety of real-life contexts. We do not claim that this review is an exhaustive list of methods and applications. However, we wish that our encyclopedic presentation will offer a point of reference for the rich work that has been undertaken over the last decades, with some key insights for the future of forecasting theory and practice. Given its encyclopedic nature, the intended mode of reading is non-linear. We offer cross-references to allow the readers to navigate through the various topics. We complement the theoretical concepts and applications covered by large lists of free or open-source software implementations and publicly-available databases.
Demand forecasting is one of the most important aspects of logistics. While some businesses are able to make educated guesses based on previous years' sales, demand forecasting using artificial intelligence (AI) technology can help companies achieve higher degrees of precision when predicting future demand for their products. But how AI-Enabled demand forecasting boosts logistics? Forecasting is a complex task that can be made simpler by using Artificial Intelligence (AI) to analyze historical data about orders placed, the market, shipping routes, and weather. Today, demand forecasting has evolved into what is known as predictive demand planning or forecasting.
Producing an accurate weather forecast and a reliable quantification of its uncertainty is an open scientific challenge. Ensemble forecasting is, so far, the most successful approach to produce relevant forecasts along with an estimation of their uncertainty. The main limitations of ensemble forecasting are the high computational cost and the difficulty to capture and quantify different sources of uncertainty, particularly those associated with model errors. In this work proof-of-concept model experiments are conducted to examine the performance of ANNs trained to predict a corrected state of the system and the state uncertainty using only a single deterministic forecast as input. We compare different training strategies: one based on a direct training using the mean and spread of an ensemble forecast as target, the other ones rely on an indirect training strategy using a deterministic forecast as target in which the uncertainty is implicitly learned from the data. For the last approach two alternative loss functions are proposed and evaluated, one based on the data observation likelihood and the other one based on a local estimation of the error. The performance of the networks is examined at different lead times and in scenarios with and without model errors. Experiments using the Lorenz'96 model show that the ANNs are able to emulate some of the properties of ensemble forecasts like the filtering of the most unpredictable modes and a state-dependent quantification of the forecast uncertainty. Moreover, ANNs provide a reliable estimation of the forecast uncertainty in the presence of model error.
Usual statistical models apply a set of known relationships to a dataset. For example, exponential smoothing will have its way of estimating the underlying demand level and trend. On the other hand, machine learning is about letting an algorithm understand a dataset and its underlying relationships on its own. A Machine Learning algorithm will run through a dataset, look at data features, and (try to) pick up any underlying relationship. Choosing the correct data to feed to your model is tremendously important.
Demand forecasting refers to the process of planning and predicting goods and materials demand to help businesses stay as profitable as possible. Without strong demand forecasting, companies risk carrying wasteful and costly surplus – or losing opportunities because they have failed to anticipate customer needs, preferences, and purchasing intent. Demand forecasting professionals have specialized skills and experience. When those skills are augmented with modern supply chain technologies and predictive analytics, supply chains can become more competitive and streamlined than ever. In the wake of the pandemic, companies are in an exceptionally fast-moving business climate.
Too many items and too few items are both scenarios that are bad for business. Massive incremental profit can be unlocked by retailers managing orders and inventory effectively. But as this requires the processing of data for a huge number of stock keeping units (SKUs), which often include perishable goods and items that are ordered daily, it is also a significant challenge. Retailers used to rely solely on the data from previous years to predict future sales (and therefore manage their inventory), but this method is only useful up to a point. However, machine learning has now evolved to the stage that it can provide accurate predictive models using different signals based on how they influence purchases.
We present a winning method of the IEEE DataPort Competition on Day-Ahead Electricity Demand Forecasting: Post-COVID Paradigm. The day-ahead load forecasting approach is based on online forecast combination of multiple point prediction models. It contains four steps: i) data cleaning and preprocessing, ii) a holiday adjustment procedure, iii) training of individual forecasting models, iv) forecast combination by smoothed Bernstein Online Aggregation (BOA). The approach is flexible and can quickly adopt to new energy system situations as they occurred during and after COVID-19 shutdowns. The pool of individual prediction models ranges from rather simple time series models to sophisticated models like generalized additive models (GAMs) and high-dimensional linear models estimated by lasso. They incorporate autoregressive, calendar and weather effects efficiently. All steps contain novel concepts that contribute to the excellent forecasting performance of the proposed method. This holds particularly for the holiday adjustment procedure and the fully adaptive smoothed BOA approach.
Machine and statistical learning algorithms can be reliably automated and applied at scale. Therefore, they can constitute a considerable asset for designing practical forecasting systems, such as those related to urban water demand. Quantile regression algorithms are statistical and machine learning algorithms that can provide probabilistic forecasts in a straightforward way, and have not been applied so far for urban water demand forecasting. In this work, we aim to fill this gap by automating and extensively comparing several quantile-regression-based practical systems for probabilistic one-day ahead urban water demand forecasting. For designing the practical systems, we use five individual algorithms (i.e., the quantile regression, linear boosting, generalized random forest, gradient boosting machine and quantile regression neural network algorithms), their mean combiner and their median combiner.
The paper proposes a novel architecture for explainable AI based on semantic technologies and AI. We tailor the architecture for the domain of demand forecasting and validate it on a real-world case study. The provided explanations combine concepts describing features relevant to a particular forecast, related media events, and metadata regarding external datasets of interest. The knowledge graph provides concepts that convey feature information at a higher abstraction level. By using them, explanations do not expose sensitive details regarding the demand forecasting models. The explanations also emphasize actionable dimensions where suitable. We link domain knowledge, forecasted values, and forecast explanations in a Knowledge Graph. The ontology and dataset we developed for this use case are publicly available for further research.
Register for our blog to get new articles as we release them. Demand Forecasting is a technique for estimation of probable demand for a product or services. It is based on the analysis of past demand for that product or service in the present market condition. Demand forecasting should be done on a scientific basis and facts and events related to forecasting should be considered. After gathering information about various aspects of the market and demand based on the past, is possible to estimate future demand.