Implementing LSTM Networks for Sales Forecasting and Predictive Modelling of Consumer Demand in the Fast-Moving Consumer Goods Industry

Abstract

Successful operations in the Fast-Moving Consumer Goods (FMCG) industry depend heavily on effective inventory management and resource optimisation. The novel method for estimating consumer demand and assisting in sales forecasting presented in this research study makes use of Long Short-Term Memory (LSTM) networks. This method provides a scalable means to overcome the challenges that arise from the massive datasets, typically of the FMCG industry, by processing data in manageable chunks. Training on up-to-date data allows for the study of large datasets for strong predictive modeling but breaks beyond memory limits. This paper also demonstrate through detailed experimentation and evaluation that our LSTM-based framework is well capable of learning the complex structures and dynamics embedded within consumer behavior. Using the temporal dependencies that the data encapsulates, LSTM networks can provide very accurate predictions. This helps relevant firms to make fully informed decisions about marketing strategies, supply chain logistics, and inventory management. In addition to high forecasting accuracy, we provide interpretability in the form of detailed visualizations. This includes plots such as the actual sales vs. forecast sales for performance evaluation, plots of the loss curve illustrating the learning dynamics of the model, and feature importance studies that help support an understanding of the features that are driving customer demand. Furthermore, we extend this work in order to enhance the interpretability of the predictive models, the suitability of permutation significance techniques in identifying relevant features that influence sales predictions. The research findings not only provide a scalable and effective solution to manage the challenges of consumer demand forecasting in dynamic market contexts but also help in advancing the potential of predictive analytics in the FMCG space. By employing advanced algorithms for data processing with LSTM networks, our novel approach provides actionable recommendations for industry practitioners to enhance the operations, mitigate the risk and capitalize on emerging trends in the market. Ultimately, this research demonstrates the groundbreaking promise of data-oriented techniques in restructuring the processes of FMCG business decision-making.