Probabilistic hierarchy reconciliation

Model choice is a property of the data, horizon and loss function. This article uses probabilistic hierarchy reconciliation to highlight those design choices and their consequences.

Practitioner lens

Model probabilistic hierarchy reconciliation at the granularity the business needs, but inspect whether reconciliation or aggregation changes bias, variance or the shape of the predictive distribution.

First experiment

Propagate predictive distributions into the downstream inventory or capacity decision where possible.

This is an original educational brief. It is a starting point for discussion, not a claim that one technique fits every supply chain.