Claiming Ideas
Claiming Ideas
العربية

Chapter 5 / 8

Forecasting: the Eid warehouse story

Watch from 33:08

"Abu Rayyan, my warehouse is empty." A Salla merchant at the start of Ramadan, 37:54

From the episode

The idea, explained

From pivot tables to probability

Forecasting is the same question at every level of sophistication: given what happened, what is likely to happen next, and how sure are we? Each method adds something the one before it lacks.

Level Method What it adds Tools
1 Last year's number, a moving average A baseline Excel, pivot tables
2 Seasonal models (Holt-Winters, exponential smoothing) Trend and repeating seasons Excel, R, Python statsmodels
3 ARIMA and its relatives Patterns in the noise itself R forecast, Python statsmodels
4 Machine learning (gradient boosting such as LightGBM) Many drivers at once: price, promotions, weather, holidays, region Python lightgbm, scikit-learn
5 Probabilistic and hierarchical forecasts A range instead of one number, consistent from product up to region statsforecast, darts, custom models

The best public benchmark is the M5 competition of 2020. It used about 42,000 daily sales series from Walmart, broken down from single products up to whole regions. The top entries were machine-learning ensembles, and LightGBM featured prominently. All of them beat the classic statistical benchmarks (Wikipedia summary; Makridakis et al., 2022).

Why the rain analogy is clever

A rainfall forecast answers three questions at once: how much, where and when, as an amount per unit of area. Retail demand has the same shape: units per region per day. Weather science also has mature tools for things retail struggles with. These include spreading a forecast across a map, combining many uncertain signals, and running ensembles (many slightly different runs whose spread shows the uncertainty). Borrowing a model from a field that has spent decades on one problem is a classic interdisciplinary move. It is also exactly the kind of new combination a patent can protect.

Why Saudi forecasting is its own problem

Ramadan and Eid follow the Hijri calendar, which moves about 11 days earlier each Gregorian year. A model that only knows "December" or "Q2" will misread the biggest season of the year. Good Saudi forecasts index time by both calendars.

From forecast to warehouse

A sales forecast becomes an inventory decision through two simple ideas:

That is why a range (3 to 4 times normal) is more useful than a single number. The 12-times outcome is a reminder that forecasts describe the data, while people's decisions change it. Concentrating all the marketing on one product helped push it far beyond what was forecast.

Try it

Synthetic data shaped like the merchant's story. Try both forecasting methods, then reveal what happened when the merchant put all his stock and marketing behind one product. Then switch views to see why the merchant needed a simpler chart.

Key terms

Sales forecast · Inventory forecast · Seasonality · Hijri calendar shift · Probabilistic forecast · Ensemble · Safety stock · Reorder point.