When Simpler Models Outperform Deep Learning in Sparse Demand Forecasting standard
By: Francois Aubin. Introduction Consider the challenge of forecasting demand for parts in industries such as aerospace, where demand is often low-volume, sparse, and subject to sudden shifts. In a recent AI initiative conducted by our team in collaboration with McKinsey & Company for a leading aerospace company, the initial assumption by data scientists was to employ complex, sophisticated forecasting models. However, a cognitive analysis of expert planners revealed that accurate forecasting alone was not their central concern. Rather, their main challenge lay in effectively supervising inventory levels and adapting forecasts dynamically in response to events such as changes in market demand, economic conditions, or policy shifts. Consequently, our team proposed a novel approach focusing on user interface design that ...
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