A field study of sales forecasting accuracy and processes

Lawrence, Michael; O’Connor, Marcus; Edmundson, Bob

doi:10.1016/s0377-2217(99)00085-5

Cited by 87 publications

(50 citation statements)

References 25 publications

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“…Second, demand planners may tend to change statistical forecasts in order to be in-line with budgeting or politicallyrelated targets set by senior managers (Fildes & Goodwin, 2007b). For example, in a field study Lawrence, O'Connor, and Edmundson (2000) questioned whether forecast accuracy was the primary objective of their company-based forecasters and suggested that their forecasts were heavily influenced by political choices within the company framework. Despite this, a recent survey by Fildes and Petropoulos (2015) showed that accuracy is generally the most important driver in the forecasting process, confirming earlier studies (for example see: McCarthy, Davis, Golicic, & Mentzer, 2006).…”

Section: Introductionmentioning

confidence: 99%

Do ‘big losses’ in judgmental adjustments to statistical forecasts affect experts’ behaviour?

Petropoulos

Fildes

Goodwin

2016

European Journal of Operational Research

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a b s t r a c tThe behaviour of poker players and sports gamblers has been shown to change after winning or losing a significant amount of money on a single hand. In this paper, we explore whether there are changes in experts' behaviour when performing judgmental adjustments to statistical forecasts and, in particular, examine the impact of 'big losses'. We define a big loss as a judgmental adjustment that significantly decreases the forecasting accuracy compared to the baseline statistical forecast. In essence, big losses are directly linked with wrong direction or highly overshooting judgmental overrides. Using relevant behavioural theories, we empirically examine the effect of such big losses on subsequent judgmental adjustments exploiting a large multinational data set containing statistical forecasts of demand for pharmaceutical products, expert adjustments and actual sales. We then discuss the implications of our findings for the effective design of forecasting support systems, focusing on the aspects of guidance and restrictiveness.

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Section: Introductionmentioning

confidence: 99%

Do ‘big losses’ in judgmental adjustments to statistical forecasts affect experts’ behaviour?

Petropoulos

Fildes

Goodwin

2016

European Journal of Operational Research

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“…Hughes (2001) identified the lack of expertise and resources as two key limitations in the implementation of complex forecasting techniques in organizations, which may explain the lack of widespread diffusion of such models. Fildes and Goodwin (2007) and Lawrence et al (2000) suggested that the reliance on expert interventions is more widespread.…”

Section: Introductionmentioning

confidence: 99%

On the identification of sales forecasting models in the presence of promotions

Trapero

Kourentzes

Fildes

2015

Journal of the Operational Research Society

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Shorter product life cycles and aggressive marketing, among other factors, have increased the complexity of sales forecasting. Forecasts are often produced using a Forecasting Support System that integrates univariate statistical forecasting with managerial judgment. Forecasting sales under promotional activity is one of the main reasons to use expert judgment. Alternatively, one can replace expert adjustments by regression models whose exogenous inputs are promotion features (price, display, etc.). However, these regression models may have large dimensionality as well as multicollinearity issues. We propose a novel promotional model that overcomes these limitations. It combines Principal Component Analysis to reduce the dimensionality of the problem and automatically identifies the demand dynamics. For items with limited history, the proposed model is capable of providing promotional forecasts by selectively pooling information across established products. The performance of the model is compared against forecasts provided by experts and statistical benchmarks, on weekly data; outperforming both substantially.

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“…Typically these roles can be seen as competing with the marketing representatives pushing for higher forecasts, production managers asking for lower forecasts, and forecasting representatives seeking accurate forecasts. In particular, Lawrence et al [14] show that while the stated organisational goal may be developing the most accurate forecast, different members of a forecasting committee often have competing incentives, which tend to bias the forecasts. Hence, the individual expectations from the forecasts may vary, which in turn may affect forecast accuracy and use [15], thus leading to different organisational costs [16].…”

Section: Introductionmentioning

confidence: 99%

Wisdom of group forecasts: Does role-playing play a role?

Önkal

Sayım

Lawrence

2012

Omega

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a b s t r a c tForecasting plays a special role in supply chain management with sales forecasts representing one of the key drivers for collaborative planning and decision making in the organisations involved. We review the important role played by judgemental forecasts in this area, focusing on group predictions. Noting the scarcity of research using group forecasts, we present the results of an experiment where consensus forecasts are elicited from structured groups with and without role-playing. Comparisons with groups without any assigned roles show that getting into tailored organisational roles does have a significant effect in the resultant forecasts. In particular, members of the role-playing groups show less agreement with consensus forecasts and display a strong commitment to their assumed roles and scripts. Furthermore, role-playing groups leave a higher percentage of model-based forecasts unadjusted and when they do make an adjustment, it is significantly less than the groups, whose members are not assigned roles. Differences between the role-playing conditions are interpreted as highlighting the importance of role framing on forecast adjustment and group forecasting behaviour. Future research directions are proposed to improve the accuracy and acceptance of group forecasts.

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A field study of sales forecasting accuracy and processes

Cited by 87 publications

References 25 publications

Do ‘big losses’ in judgmental adjustments to statistical forecasts affect experts’ behaviour?

Do ‘big losses’ in judgmental adjustments to statistical forecasts affect experts’ behaviour?

On the identification of sales forecasting models in the presence of promotions

Wisdom of group forecasts: Does role-playing play a role?

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