Econometric count data forecasting and data mining (cluster analysis) applied to stochastic demand in truckload routing

The challenge of truckload routing is increased in complexity by the introduction of stochastic demand. Typically, this demand is generalized to follow a Poisson distribution. In this chapter, we cluster the demand data using data mining techniques to establish the more acceptable distribution to predict demand. We then examine this stochastic truckload demand using an econometric discrete choice model known as a count data model. Using actual truckload demand data and data from the bureau of transportation statistics, we perform count data regressions. Two outcomes are produced from every regression run, the predicted demand between every origin and destination, and the likelihood that that demand will occur. The two allow us to generate an expected value forecast of truckload demand as input to a truckload routing formulation. The negative binomial distribution produces an improved forecast over the Poisson distribution.