Judgmental forecast adjustments over different time horizons

Maud Van den Broeke, Shari De Baets, Ann Vereecke, Philippe Baecke and Karlien Vanderheyden

Omega, 2019, vol. 87, issue C, 34-45

Abstract: Accurate demand forecasting is the cornerstone of a firm’s operations. The statistical system forecasts are often judgmentally adjusted by forecasters who believe their knowledge can improve the final forecasts. While empirical research on judgmental forecast adjustments has been increasing, an important aspect is under-studied: the impact of these adjustments over different time horizons. Collecting data from 8 business cases, retrieving over 307,200 forecast adjustments, this work assesses how the characteristics (e.g., size and direction) and accuracy of consecutive adjustments change over different time horizons. We find that closer to the sales point, the number of adjustments increases and adjustments become larger and more positive; and that adjustments, both close and distant from the sales point, can deteriorate the final forecast accuracy. We discuss how these insights impact operational activities, such as production planning.

Keywords: Judgmental forecasting; Empirical analysis; Time horizon; Operations (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (6)

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DOI: 10.1016/j.omega.2018.09.008

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