Application of Facebook's Prophet Algorithm for Successful Sales Forecasting Based on Real-world Data

TL;DR

This paper introduces a retail sales forecasting framework utilizing Facebook's Prophet algorithm, validated with real-world data from a major retail company, enhancing forecasting accuracy and reliability classification.

Contribution

It presents a novel framework combining Prophet and backtesting for retail sales forecasting and reliability classification, tested on real-world data.

Findings

High forecasting accuracy demonstrated on real data

Effective classification of product portfolio by forecast reliability

Framework applicable to retail industry environments

Abstract

This paper presents a framework capable of accurately forecasting future sales in the retail industry and classifying the product portfolio according to the expected level of forecasting reliability. The proposed framework, that would be of great use for any company operating in the retail industry, is based on Facebook's Prophet algorithm and backtesting strategy. Real-world sales forecasting benchmark data obtained experimentally in a production environment in one of the biggest retail companies in Bosnia and Herzegovina is used to evaluate the framework and demonstrate its capabilities in a real-world use case scenario.