Case Study: Improving Forecast Accuracy at Hershey’s Using a Hybrid Hierarchical Approach

Forecasting is traditionally done at a particular level of aggregation—top-down, middleout, or bottom up—depending on the data available and the purpose of the forecast. This article is a case study of how Hershey’s and First Analytics reimagined the process, adopting a hybrid approach. We experimented with moving beyond the standard business hierarchy of product and location, etc. to an analytics focused, data-driven hierarchy that examines similarities across all the SKUs within the business, incorporating both Time Series and unsupervised learning models. The improvements in forecast accuracy with this approach are significant, offering companies a valuable addition to their forecasting ...