Making the Newsvendor Smart – Order Quantity Optimization with ANNs for a Bakery Chain

Accurate demand forecasting is particularly crucial for products with short shelf life like bakery products. Over- and underestimation of customer demand affects not only profit margins of bakeries but is also responsible for 600,000 metric tons of food waste every year in Germany. To solve this problem, we develop an IT artifact based on artificial neural networks, which is automating the manual order process and capable of reducing costs as well as food waste. To test and evaluate our artifact, we cooperated with an SME bakery chain from Germany. The bakery chain runs 40 points of sale (POS) in southern Germany. After algorithm based reconstructing and cleaning of the censored sales data, we compare two different data-driven newsvendor approaches for this inventory problem. We show that both models are able to significantly improve the forecast quality (cost savings up to 30%) compared to human planners

Integration models of demand forecasting and inventory control for coconut sugar using the ARIMA and EOQ modification methods

Inventory control is critical because the inability to overcome inventory problems causes unpreparedness to meet consumer demand. MSMEs Bekawan Agro Coconut Sugar, independently around 35% -70%, cannot meet consumers' demand for coconut sugar, so an inventory control model is needed. Inventory control models must integrate with demand forecasting as an inventory control input. This study aims to integrate the demand fore­casting model with the inventory control model. The method used for demand forecasting is ARIMA. The inventory control model uses a modi­fied EOQ hybrid method because coconut sugar products have a shelf life; they also use coconut sap as raw material, which must be processed to prevent fermentation. The research results show that demand forecasting for one year ahead is a total of 10,310.82 Kilograms with an economic lot size of 120 Kilograms and a reorder point when the inventory position is 30 Kilograms. Daily production of 30 kilograms requires 210 litres of coconut sap/per day. The amount of sap needed requires 105 coconut trees / per day. Arrival time of coconut sugar at the storage warehouse every five days. The resulting model can be a solution for sustainable MSMEs

Data-driven decision support for perishable goods

Retailers offering perishable consumer goods such as baked goods have to make hundreds of ordering decisions every day because they typically operate numerous stores and offer a wide range of products. Daily decisions or even intraday decisions are necessary as perishable goods deteriorate quickly and can usually only be sold on one day. Obviously, decision making concerning ordering quantities is a challenging but important task for each retailer as it affects its operational performance. Ordering too little leads to unsatisfied customers while ordering too much leads to discarded goods, which is a major cost factor. In practice, store managers are typically responsible for decisions related to perishable goods, which is not optimal for various reasons. Most importantly, the task is time consuming and some store managers may not have the necessary skills, which results in poor decisions. Hence, our goal is to develop and evaluate methods to support the decision-making process, which is made possible by advances in information technology and data analysis. In particular, we investigate how to exploit large datasets to make better decisions. For daily ordering decisions, we prose data-driven solution approaches for inventory management models that capture the trade-off of ordering too much or ordering too little such that the profits are maximized. First, we optimize the order quantity for each product independently. Second, we consider demand substitution and jointly optimize the order quantities of substitutable products. For intraday decisions, we formulate a scheduling problem for the optimization of baking plans based on hourly forecasts. Demand forecasts are an essential input for operational decisions. However, retail forecasting research is mainly devoted to weekly data using statistical time series models or linear regression models, whereas large-scale forecasting on daily data is understudied. We phrase the forecasting problem as a supervised Machine Learning task and conduct a comprehensive empirical evaluation to illustrate the suitability of Machine Learning methods. We empirically evaluate our solution approaches on real-world datasets from the bakery domain that are enriched with explanatory feature data. We find that our approaches perform competitive to state-of-the-art methods. Data-driven approaches substantially outperform traditional methods if the dataset is large enough. We also find that the benefit of improved forecasting dominates other potential benefits of data-driven solution methods for decision optimization. Overall, we conclude that data-driven decision support for perishable goods is feasible and superior to alternatives that are based on unreasonable assumptions or established time series models

Demand Forecast Model and Route Optimization to Improve the Supply of an SME in the Bakery Sector

This research employs the Lean Six Sigma DMAIC methodology to address enhancing product distribution efficiency in a bakery chain. Following the diagnostic phase, demand forecasting models were developed using ARIMA and Holt Winter methods, with ARIMA demonstrating higher prediction accuracy. Furthermore, route mapping was conducted using the Clark-Wright algorithm. Key performance indicators (KPIs) such as delivery time, distance traveled, and MAPE (Mean Absolute Percentage Error) will be established for process control. Implementing these improvements aims to achieve more efficient product distribution management within the bakery chai

Digital twin-driven real-time planning, monitoring, and controlling in food supply chains

There needs to be more clarity about when and how the digital twin approach could benefit the food supply chains. In this study, we develop and solve an integrated problem of procurement, production, and distribution strategies (PPDs) in a medium-scale food processing company. Using the digital twin approach, the model considers the industrial symbiosis opportunities between the supplier, manufacturer, and customer using interval and sequence variables operating in a constrained environment using mixed-integer linear programming (MILP) and agent-based simulation (ABS) methodology. The study optimizes the make-span and lead time, simultaneously achieving a higher level of digitalization. The analysis demonstrates how digital twin accelerates supply chain productivity by improving makespan time, data redundancy (DR), optimal scheduling plan (OSP), overall operations effectiveness (OOE), overall equipment effectiveness (OEE), and capacity utilization. Our findings provide compelling evidence that the seamless integration PPDs enormously enhance production flexibility, resulting in an excellent service level of 94 %. Managers leverage real-time simulation to accurately estimate the replenishment point with minimal lead time, ensuring optimized operations. Furthermore, our results demonstrate that implementing PPDs has yielded considerable benefits. Specifically, we observed a remarkable 65 % utilization of the pasteurizer and aging vessel and an impressive 97 % utilization of the freezer. Moreover, by applying the DT model, the present model found a notable 6 % reduction in backlog, further streamlining operations and enhancing efficiency

Predictive Big Data Analytics for Supply Chain Demand Forecasting: Methods, Applications, and Research Opportunities

Big data analytics (BDA) in supply chain management (SCM) is receiving a growing attention. This is due to the fact that BDA has a wide range of applications in SCM, including customer behavior analysis, trend analysis, and demand prediction. In this survey, we investigate the predictive BDA applications in supply chain demand forecasting to propose a classification of these applications, identify the gaps, and provide insights for future research. We classify these algorithms and their applications in supply chain management into time-series forecasting, clustering, K-nearest-neighbors, neural networks, regression analysis, support vector machines, and support vector regression. This survey also points to the fact that the literature is particularly lacking on the applications of BDA for demand forecasting in the case of closed-loop supply chains (CLSCs) and accordingly highlights avenues for future research

IEEE Access Special Section Editorial: Big Data Technology and Applications in Intelligent Transportation

During the last few years, information technology and transportation industries, along with automotive manufacturers and academia, are focusing on leveraging intelligent transportation systems (ITS) to improve services related to driver experience, connected cars, Internet data plans for vehicles, traffic infrastructure, urban transportation systems, traffic collaborative management, road traffic accidents analysis, road traffic flow prediction, public transportation service plan, personal travel route plans, and the development of an effective ecosystem for vehicles, drivers, traffic controllers, city planners, and transportation applications. Moreover, the emerging technologies of the Internet of Things (IoT) and cloud computing have provided unprecedented opportunities for the development and realization of innovative intelligent transportation systems where sensors and mobile devices can gather information and cloud computing, allowing knowledge discovery, information sharing, and supported decision making. However, the development of such data-driven ITS requires the integration, processing, and analysis of plentiful information obtained from millions of vehicles, traffic infrastructures, smartphones, and other collaborative systems like weather stations and road safety and early warning systems. The huge amount of data generated by ITS devices is only of value if utilized in data analytics for decision-making such as accident prevention and detection, controlling road risks, reducing traffic carbon emissions, and other applications which bring big data analytics into the picture