APPLICATION OF MACHINE LEARNING IN PREDICTION AND

OPTIMIZATION OF PRODUCT BACK-ORDERS

ABSTRACT
A backorder is a customer order that cannot be fulfilled when ordered, and for which the
customer is ready to wait for some time. The number of back-order days and the number of
back-ordered items are important measures for the customer service quality of the company
and the efficiency of its inventory management.

Material backorder is a common supply chain problem that affects the level of service and
efficiency of the inventory system. The identification of parts with the highest chances of
shortfall prior to their occurrence can offer a great opportunity to improve the overall
performance of the company. One of the reasons behind product backorder is strong sales
performance (e.g. The sales cannot match production due to the high demand of the product).
Backorders can, however, upset consumers and reduced their loyalty for the product. Every
company desire to avoid backorders, but side by side they also desire to avoid overstocking
every product to tackle higher inventory costs.

Here, we are using machine learning classifiers to propose a predictive model for this
imbalanced class problem. With the help of machine learning, patterns related to backorders
are identified before the customers actually place their orders. Now the companies can adjust
their production to reduce delays and their customer service team can provide exact dates to
make their customers happy. This predictive analytical approach allows the company to deliver
maximum product to the customers at the lowest cost to the company.

Submitted By:

Prachi Jha

PGFD-1836