An optimized model using LSTM network for demand forecasting

• Published in: Computers & industrial engineering Vol. 143; p. 106435
• Main Authors: Abbasimehr, Hossein, Shabani, Mostafa, Yousefi, Mohsen
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01.05.2020
• Subjects: Demand prediction; LSTM; RNN; Statistical methods; Time series forecasting; Time series forecasting; Statistical methods; LSTM; RNN; Demand prediction
• ISSN: 0360-8352; 1879-0550
• DOI: 10.1016/j.cie.2020.106435

•A demand forecasting method based on multi-layer LSTM networks is proposed.•The proposed method improves the forecasting accuracy.•It has strong ability to capture nonlinear patterns in time series data.•The empirical results show that the method outperforms other standard techniques. In a business environment with strict competition among firms, accurate demand forecasting is not straightforward. In this paper, a forecasting method is proposed, which has a strong capability of predicting highly fluctuating demand data. Therefore, in this paper we propose a demand forecasting method based on multi-layer LSTM networks. The proposed method automatically selects the best forecasting model by considering different combinations of LSTM hyperparameters for a given time series using the grid search method. It has the ability to capture nonlinear patterns in time series data, while considering the inherent characteristics of non-stationary time series data. The proposed method is compared with some well-known time series forecasting techniques from both statistical and computational intelligence methods using demand data of a furniture company. These methods include autoregressive integrated moving average (ARIMA), exponential smoothing (ETS), artificial neural network (ANN), K-nearest neighbors (KNN), recurrent neural network (RNN), support vector machines (SVM) and single layer LSTM. The experimental results indicate that the proposed method is superior among the tested methods in terms of performance measures.