Performance of state space and ARIMA models for consumer retail sales forecasting

Forecasting future sales is one of the most important issues that is beyond all strategic and planning decisions in effective operations of retail businesses. For profitable retail businesses, accurate demand forecasting is crucial in organizing and planning production, purchasing, transportation and labor force. Retail sales series belong to a special type of time series that typically contain trend and seasonal patterns, presenting challenges in developing effective forecasting models. This work compares the forecasting performance of state space models and ARIMA models. The forecasting performance is demonstrated through a case study of retail sales of five different categories of women footwear: Boots, Booties, Flats, Sandals and Shoes. On both methodologies the model with the minimum value of Akaike's Information Criteria for the in-sample period was selected from all admissible models for further evaluation in the out-of-sample. Both one-step and multiple-step forecasts were produced. The results show that when an automatic algorithm the overall out-of-sample forecasting performance of state space and ARIMA models evaluated via RMSE, MAE and MAPE is quite similar on both one-step and multi-step forecasts. We also conclude that state space and ARIMA produce coverage probabilities that are close to the nominal rates for both one-step and multi-step forecasts.

Balancing and lot-sizing mixed-model lines in the footwear industry

This report describes the full research proposal for the project \Balancing and lot-sizing mixed-model lines in the footwear industry", to be developed as part of the master program in Engenharia Electrotécnica e de Computadores - Sistemas de Planeamento Industrial of the Instituto Superior de Engenharia do Porto. The Portuguese footwear industry is undergoing a period of great development and innovation. The numbers speak for themselves, Portugal footwear exported 71 million pairs of shoes to over 130 countries in 2012. It is a diverse sector, which covers different categories of women, men and children shoes, each of them with various models. New and technologically advanced mixed-model assembly lines are being projected and installed to replace traditional mass assembly lines. Obviously there is a need to manage them conveniently and to improve their operations. This work focuses on balancing and lot-sizing stitching mixed-model lines in a real world environment. For that purpose it will be fundamental to develop and evaluate adequate effective solution methods. Different objectives may be considered, which are relevant for the companies, such as minimizing the number of workstations, and minimizing the makespan, while taking into account a lot of practical restrictions. The solution approaches will be based on approximate methods, namely by resorting to metaheuristics. To show the impact of having different lots in production the initial maximum amount for each lot is changed and a Tabu Search based procedure is used to improve the solutions. The developed approaches will be evaluated and tested. A special attention will be given to the solution of real applied problems. Future work may include the study of other neighbourhood structures related to Tabu Search and the development of ways to speed up the evaluation of neighbours, as well as improving the balancing solution method.