Ensemble Sales Forecasting Study in Semiconductor Industry

Sales forecasting plays a prominent role in business planning and business strategy. The value and importance of advance information is a cornerstone of planning activity, and a well-set forecast goal can guide sale-force more efficiently. A forecasting usually depends on many factors such as the product feature, supply chain constrain, market demand, market share, promotion strategy, competition, macroeconomics condition and others. However, most of those data is hard or even impossible to collect. In this paper CPU sales forecasting of Intel Corporation, a multinational semiconductor industry, was considered. We consolidated the available data resource and forecasting requirement, matched them against the optimal methodology. Past sale, future booking, exchange rates, Gross domestic product (GDP) forecasting, seasonality and other indicators were innovatively incorporated into the quantitative modeling. Benefit from the recent advances in computation power and software development, millions of models built upon multiple regressions, time series analysis, random forest and boosting tree were executed in parallel. The models with smaller validation errors were selected to form the ensemble model. To better capture the distinct characteristics, forecasting models were implemented at lead time and lines of business level. The moving windows validation process automatically selected the models which closely represent current market condition. The weekly cadence forecasting schema allowed the model to response effectively to market fluctuation. Generic variable importance analysis was also developed to increase the model interpretability. Rather than assuming fixed distribution, this non-parametric permutation variable importance analysis provided a general framework across methods to evaluate the variable importance. This variable importance framework can further extend to classification problem by modifying the mean absolute percentage error(MAPE) into misclassify error. This forecast output now helps formulate part of the input provided to public and investors as guideline for the following quarter during Intel’s quarterly earning release. 1 Background and Motivation Sales forecasting is the foundation for planning various phases of the company’s business operations. A sales forecast predicts the value of sales over a period of 1 Please find the demo code at https://github.com/qx0731/ensemble_forecast_methods. ar X iv :1 70 5. 00 00 3v 2 [ st at .M L ] 2 M ay 2 01 7