Advances in Industrial Engineering

Advances in Industrial Engineering

Data-Driven Hierarchical Forecasting Model for Point-of-Sale (POS) Transaction Counts

Authors
School of Industrial Engineering, College of Engineering, University of Tehran, Tehran, Iran
Abstract
Banks and other organizations in the financial sector, particularly payment service providers (PSPs), require accurate forecasts of transaction counts to optimize procurement planning for point-of-sale (POS) devices under budget constraints. To address this need, this study proposes a two-level hierarchical forecasting framework for POS transaction counts to support tactical decision-making. At the first level, a time-weighted Long Short-Term Memory (LSTM) model is developed to forecast monthly transaction counts over a one-year horizon. A set of candidate exogenous variables is initially identified and subsequently refined using Goal Programming Best-Worst Method (GP-BWM) to improve model performance. At the second level, a Random Forest (RF) model is employed to estimate the relative weights of daily transactions within each month based on intrinsic daily characteristics. A forward feature selection approach is further applied to identify the most influential daily features affecting transaction distribution. The proposed framework is validated through a real-world case study of a PSP in Iran. The results indicate that the time-weighted LSTM achieves high predictive accuracy with R² values of 0.90 and 0.89 on validation and test datasets for monthly forecasting, respectively. Additionally, the daily feature selection process demonstrates strong explanatory power with an R² of 0.9625. These findings confirm the effectiveness and practical applicability of the proposed framework in supporting data-driven planning.
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Articles in Press, Accepted Manuscript
Available Online from 08 July 2026