The impact of training data tailoring on demand forecasting models in retail

Demand forecasting plays a very important role in retail business. Retail information systems commonly store large amounts of data which are subsequently used by sophisticated data mining tools for building forecasting models. Quality of these models is usually measured through their predictive accuracy as their most important property, followed by other measures which consider average underestimate and overestimate costs etc. Even though the choice of data mining algorithm is usually paramount, training set cleansing and preparation has a significant influence on final model performance. This article discusses and analyses the impact of training set preparation and tailoring on a final forecasting model performance used in a real world example from the retail industry.