Predictive Analytics for Inventory Backorder Optimization Using Machine Learning

The need for effective inventory management in the transition from “Just-in-Time” to “Just-in-Case” supply chain strategies was addressed by developing a machine learning model to predict inventory backorders. Using a large store keeping unit dataset, five supervised learning algorithms, namely, logistic regression, random forest, k-nearest neighbours, Naïve Bayes, and gradient boosting, were implemented with Python 3.13 Data imbalance was managed using the synthetic minority over-sampling technique, while power transformation was applied to improve data distribution and model performance. Among the models, random forest demonstrated the highest prediction accuracy at 98% and a strong receiver operating characteristic score of 0.897, making it the best model for backorder prediction. This approach enhances supply chain resilience and proactive inventory control, enabling manufacturers to mitigate risks of stockouts and optimize resource planning. It is necessary to incorporate advanced balancing techniques, hyperparameter tuning, and cross-validation methods to improve predictive performance further.