Toward a smart forecasting model in supply chain management: A case study of coffee in Vietnam

Abstract

Forecasting is a crucial part of supply chain management. Accurate forecasts have a strong influence on supply chain performance. Many forecasting methods have been developed and adapted in various domains and industries. However, none are perfect in all contexts due to the data's characteristics and the methods' strength. Hence, we propose a new ARIMAX‐LSTM hybrid forecasting model that integrates ARIMAX and LSTM models to improve the ability to capture different combinations of linear and nonlinear patterns in time series. Our proposed model is validated in a case study of coffee demand in Vietnam. The case study results show that our proposed model outperforms the well‐known single and current hybrid models regarding performance measures and degree of association. Moreover, to prove the model's robustness, we test and compare our proposed model to the previous study for Thailand's agricultural products (pineapple, corn, and cassava). Computational results demonstrate that our hybrid model is superior in the majority of experiments. It has a strong capability of predicting complex time series data. Furthermore, our proposed method increases forecasting accuracy and enhances supply chain performance (measured by the bullwhip effect; net‐stock amplification, and transportation cost.