Enhancing Hierarchical Classification in Tree-Based Models Using Level-Wise Entropy Adjustment

Hierarchical classification, which organizes items into structured categories and subcategories, has emerged as a powerful solution for handling large and complex datasets. However, traditional flat classification approaches often overlook the hierarchical dependencies between classes, leading to suboptimal predictions and limited interpretability. This paper addresses these challenges by proposing a novel integration of tree-based models with hierarchical-aware split criteria through adjusted entropy calculations. The proposed method calculates entropy at multiple hierarchical levels, ensuring that the model respects the taxonomic structure during training. This approach aligns statistical optimization with class semantic relationships, enabling more accurate and coherent predictions. Experiments conducted on real-world datasets structured according to the GS1 Global Product Classification (GPC) system demonstrate the effectiveness of our method. The proposed model was applied using tree-based ensemble methods combined with the newly developed hierarchy-aware metric Penalized Information Gain (PIG). PIG was implemented with level-wise entropy adjustments, assigning greater weight to higher hierarchical levels to maintain the taxonomic structure. The model was trained and evaluated on two real-world datasets based on the GS1 Global Product Classification (GPC) system. The final dataset included approximately 30,000 product descriptions spanning four hierarchical levels. An 80-20 train–test split was used, with model hyperparameters optimized through 5-fold cross-validation and Bayesian search. The experimental results showed a 12.7% improvement in classification accuracy at the lowest hierarchy level compared to traditional flat classification methods, with significant gains in datasets featuring highly imbalanced class distributions and deep hierarchies. The proposed approach also increased the F1 score by 12.6%. Despite these promising results, challenges remain in scaling the model for very large datasets and handling classes with limited training samples. Future research will focus on integrating neural networks with hierarchy-aware metrics, enhancing data augmentation to address class imbalance, and developing real-time classification systems for practical use in industries such as retail, logistics, and healthcare.