Investigating the effect of weather on consumer demand in Loblaw's supply chain

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Changes in weather affect not only daily lives but also pose financial risks to businesses by influencingconsumer demand for many products. Retailers are encouraged to place orders for weather-sensitive productslong before a season starts, but history has shown that unexpected weather patterns (an abnormally mild winter,for example) can result in significant drops in demand, leading to huge losses for companies and impactingoverall economic activity. For example, a below-normal temperature will cause a higher-than-normal inventorylevel in its weather-sensitive products. It is well understood in supply chain management that inventory of thewrong product in the wrong place at the wrong time costs money. Therefore the company requires a model thatcould determine the relationship between the demand for the product and temperature. Using this model, thecompany would benefit from determining demand and maintaining the optimal on-shelf availability forcustomers while maintaining capacity and safety stock requirements at its distribution centers.