Against Your Better Judgment? How Organizations Can Improve Their Use of Management Judgment in Forecasting

Robert Fildes () and Paul Goodwin ()
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Robert Fildes: Department of Management Science, Lancaster University Management School, Lancaster LAI 4YX, United Kingdom
Paul Goodwin: Management School, University of Bath, Claverton Down, Bath BA2 7AY, United Kingdom

Interfaces, 2007, vol. 37, issue 6, 570-576

Abstract: Accurate forecasts are crucial to successful organizational planning. In 2001, 40 international experts published a set of principles to guide best practices in forecasting. Some of these principles relate to the use of management judgment. Most organizations use judgment at some stage in their forecasting process, but do they do so effectively? Although judgment can lead to significant improvements in forecasting accuracy, it can also be biased and inconsistent. The principles show how forecasters should use judgment and assess its effectiveness. We conducted a survey of 149 forecasters to examine the use of judgment based on these established principles and to investigate whether their forecasting procedures were consistent with the principles. In addition, we conducted four in-depth case studies. Although we found examples of good practice, we also discovered that many organizations would improve forecast accuracy if they followed basic principles such as limiting judgmental adjustments of quantitative forecasts, requiring managers to justify their adjustments in writing, and assessing the results of judgmental interventions.

Keywords: applications; forecasting (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (74)

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