Demand Forecasting for Perishable Commodities: A Case Study of Inflight Food Demand for Low Cost Airline
The MIT Global Supply Chain and Logistics Excellence (SCALE) Network is an international alliance of leading edge research and education centers, dedicated to the development and dissemination of global innovation in supply chain and logistics. The Global SCALE Network allows faculty, researchers, students, and affiliated companies from all six centers around the world to pool their expertise and collaborate on projects that will create supply chain and logistics innovations with global applications. This reprint is intended to communicate research results of innovative supply chain research completed by faculty, researchers, and students of the Global SCALE Network, thereby contributing to the greater public knowledge about supply chains. Location: Building E40, Room 267 1 Amherst St. Summary: Inflight food sales have become an important revenue source for low cost airlines where demand forecasting is play a critical role in profitability. By creating a new and improved forecasting method, the research is aiming for reduced waste and lost sales, thus will increase the business profitability. Daniel holds a Bachelors in Ocean engineering from Institut Teknologi Bandung and MSCM from Malaysia Institute for Supply Chain Innovation, part of MIT global Scale Network. Prior to joining MISI, Daniel work as an field engineer for Hafar Daya Konstruksi, where he handle engineering issue for pipeline construction and rectification. KEY INSIGHTS 1. The two channels of food service, Pre Book Meal and Inflight sales, have different demand pool. Thus capturing demand from both channels will greatly increase the revenue. 2. The demand of inflight perishable goods is normally distributed and affected by seasonality. 3. News vendor model provide a more robust solution with significantly less waste. Introduction Background " Low cost Airlines " or " Budget Airlines " is a term used to address Airlines that generally have lower fares in exchange with less comfort services. This business model start at 1971 when Southwest airlines, an America based airlines, introduce a concept that eliminate some of the extra services in order to reduce cost and then pass the saving to the customers. A business model that targeting customers from middle and lower class, boosting their demand by reducing the overall price, where they only need to pay for what they need. This model is a perfect picture of " lean " that only accommodate the need of transportation and forsake the other additional services. A business model that has been proven throughout the globe, Started by Ryanair in