Leveraging Elastic Demand for Forecasting

TL;DR

This paper introduces a method to incorporate elastic demand into forecasting by reallocating historical demand data, aiming to reduce variance and improve supply planning accuracy.

Contribution

It presents a novel approach to account for elastic demand during forecasting, enhancing demand prediction and supply chain efficiency.

Findings

Reduced demand variance through elastic demand reallocation

Improved forecasting accuracy demonstrated in case studies

Enhanced supply planning effectiveness

Abstract

Demand variance can result in a mismatch between planned supply and actual demand. Demand shaping strategies such as pricing can be used to shift elastic demand to reduce the imbalance. In this work, we propose to consider elastic demand in the forecasting phase. We present a method to reallocate the historical elastic demand to reduce variance, thus making forecasting and supply planning more effective.