Applying ANN and TM to Build a Prediction Model for the Site Selection of a Convenience Store

Abstract

This article builds a systematic and reliable site selection prediction model for a chain of convenience stores (CVSs) to improve the existing decision method of using experienced managers to select sites. Specifically, this study used an artificial neural network (ANN) technique—back-propagation neural network (BPN)—to build the prediction model. To achieve optimization in executing the BPN, the Taguchi method (TM) was adopted to find the optimal parameters for the BPN. The actual data from a chain of CVSs was employed to validate the model. The results indicated that the prediction accuracy rate and decision quality of the proposed model were higher than those of the existing manager-directed decision method. With intense retail competition, the accurate determination of the location of a new convenience store (CVS) is vital to its success. This study asserts that with systematic and scientific assessment, the site selection decision for new chain CVSs will be less human-biased in nature if the prediction model is used as an auxiliary decision-making tool.