A Deep Learning-Based Inventory Management and Demand Prediction Optimization Method for Anomaly Detection

Abstract

The rapid development of emerging technologies such as machine learning and data mining promotes a lot of smart applications, e.g., Internet of things (IoT). The supply chain management and communication are a key research direction in the IoT environment, while the inventory management (IM) has increasingly become a core part of the whole life cycle management process of the supply chain. However, the current situations of a long supply chain life cycle, complex supply chain management, and frequently changing user demands all lead to a sharp rise in logistics and communication cost. Hence, as the core part of the supply chain, effective and predictable IM becomes particularly important. In this way, this work intends to reduce the cost during the life cycle of the supply chain by optimizing the IM process. Specifically, the IM process is firstly formulated as a mathematical model, in which the objective is to jointly minimize the logistic cost and maximize the profit. On this basis, a deep inventory management (DIM) method is proposed to address this model by using the long short-term memory (LSTM) theory of deep learning (DL). In particular, DIM transforms the time series problem into a supervised learning one and it is trained using the back propagation pattern, such that the training process can be finished efficiently. The experimental results show that the average inventory demand prediction accuracy of DIM exceeds about 80%, which can reduce the inventory cost by about 25% compared with the other state-of-the-art methods and detect the anomaly inventory actions quickly.