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On Knowing When to Switch from Quantitative to Judgemental Forecasts

Nada R. Sanders (Wright State University, USA)
Larry P. Ritzman (Boston College, USA)

International Journal of Operations & Production Management

ISSN: 0144-3577

Article publication date: 1 June 1991

Abstract

The conditions under which forecasts from expert judgement outperform traditional quantitative methods are investigated. It is shown that judgement is better than quantitative techniques at estimating the magnitude, onset, and duration of temporary change. On the other hand, quantitative methods provide superior performance during periods of no change, or constancy, in the data pattern. These propositions were tested on a sample of real business time series. To demonstrate how these propositions might be implemented, and to assess the potential value of doing so, a simple rule is tested on when to switch from quantitative to judgemental forecasts. The results show that it significantly reduces forecast error. These findings provide operations managers with some guidelines as to when (and when not) they should intervene in the forecasting process.

Keywords

Citation

Sanders, N.R. and Ritzman, L.P. (1991), "On Knowing When to Switch from Quantitative to Judgemental Forecasts", International Journal of Operations & Production Management, Vol. 11 No. 6, pp. 27-37. https://doi.org/10.1108/01443579110005523

Publisher

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MCB UP Ltd

Copyright © 1991, MCB UP Limited