It is important for a retail company to forecast its sale in correct and accurate way to be ableto plan and evaluate sales and commercial strategies. Various forecasting techniques areavailable for this purpose. Two popular modelling techniques are Predictive Modelling andEconometric Modelling. The models created by these techniques are used to minimize thedifference between the real and the predicted values. There are several different errormetrics that can be used to measure and describe the difference. Each metric focuses ondifferent properties in the forecasts and it is hence important which metrics that is used whena model is created. Most traditional techniques use the sum of squared error which havegood mathematical properties but is not always optimal for forecasting purposes. This thesisfocuses on optimization of three widely used error metrics MAPE, WMAPE and RMSE.Especially the metrics protection against overfitting, which occurs when a predictive modelcatches noise and irregularities in the data, that is not part of the sought relationship, isevaluated in this thesis.Genetic Programming, a general optimization technique based on Darwin’s theories ofevolution. In this study genetic programming is used to optimize predictive models based oneach metrics. The sales data of five products of ICA (a Swedish retail company) has beenused to observe the effects of the optimized error metrics when creating predictive models.This study shows that all three metrics are quite poorly protected against overfitting even ifWMAPE and MAPE are slightly better protected than MAPE. However WMAPE is the mostpromising metric to use for optimization of predictive models. When evaluated against allthree metrics, models optimized based on WMAPE have the best overall result. The results oftraining and test data shows that the results hold in spite of overfitted models. / Program: Magisterutbildning i informatik

Econometric and predictive modeling techniques are two popular forecasting techniques. Both ofthese techniques have their own advantages and disadvantages. In this thesis some econometricmodels are considered and compared to predictive models using sales data for five products fromICA a Swedish retail wholesaler. The econometric models considered are regression model,exponential smoothing, and ARIMA model. The predictive models considered are artificialneural network (ANN) and ensemble of neural networks. Evaluation metrics used for thecomparison are: MAPE, WMAPE, MAE, RMSE, and linear correlation. The result of this thesisshows that artificial neural network is more accurate in forecasting sales of product. But it doesnot differ too much from linear regression in terms of accuracy. Therefore the linear regressionmodel which has the advantage of being comprehensible can be used as an alternative to artificialneural network. The results also show that the use of several metrics contribute in evaluatingmodels for forecasting sales. / Program: Magisterutbildning i informatik