Retailers face a formidable challenge of ensuring that they have optimum levels of inventory for goods that are perishable. This is because these goods have short shelf life without any salvage value and can hurt the profitability of the retailers significantly. It therefore becomes critical for the retailers to know accurate forecasts for perishable items such as fresh milk and yoghurt. These subclasses also drive footfall into the retail stores and hence it is important to maintain high levels of service for these products.

We aim to forecast daily sales (unit sold) of the top 5 selling SKUs for the coming week (1st August 2012 to 7th August 2012). We identify the top 5 selling SKUs in 2012.

The consumer products sector faces volatility in demand on a high scale and level of complexity, thereby posing challenges in the area of inventory management. Economic volatility and demand variability present challenges that simple models of demand forecasts are not equipped to handle. An important method of tacking demand variability is an effective way to improve the inventory control policy, which should be designed to smoothen stocking response to demand variation arising from the customers.

The competitive retail landscape demands stores to maximize return from all possible avenues. This urge is further exacerbated by customer price-sensitivity and low customer loyalty. ABC retail too struggles with this problem and is exploring ways to improve its bottom-line. We, as a consultant, have come up with a proposal that would help ABC reduce cost without significant impact on revenue, thus improving the store’s profitability. As part of this proposal ABC is required to consolidate suppliers and enter long term contract with major players in order to exploit better deal.