Rights statement: The final, definitive version of this article has been published in the Journal, International Journal of Forecasting 29 (2), 2013, © ELSEVIER.
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Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Analysis of judgmental adjustments in the presence of promotions
AU - Trapero Arenas, Juan
AU - Pedregal, Diego J.
AU - Fildes, Robert
AU - Kourentzes, Nikolaos
N1 - The final, definitive version of this article has been published in the Journal, International Journal of Forecasting 29 (2), 2013, © ELSEVIER.
PY - 2013/4
Y1 - 2013/4
N2 - Sales forecasting is increasingly complex due to many factors, such as product life cycles that have become shorter, more competitive markets and aggressive marketing. Often, forecasts are produced using a Forecasting Support System that integrates univariate statistical forecasts with judgment from experts in the organization. Managers add information to the forecast, like future promotions, potentially improving accuracy. Despite the importance of judgment and promotions, the literature devoted to study their relationship on forecasting performance is scarce. We analyze managerial adjustments accuracy under periods of promotions, based on weekly data from a manufacturing company. Intervention analysis is used to establish whether judgmental adjustments can be replaced by multivariate statistical models when responding to promotional information. We show that judgmental adjustments can enhance baseline forecasts during promotions, but not systematically. Transfer function models based on past promotions information achieved lower overall forecasting errors. Finally, a hybrid model illustrates the fact that human experts still added value to the transfer function models.
AB - Sales forecasting is increasingly complex due to many factors, such as product life cycles that have become shorter, more competitive markets and aggressive marketing. Often, forecasts are produced using a Forecasting Support System that integrates univariate statistical forecasts with judgment from experts in the organization. Managers add information to the forecast, like future promotions, potentially improving accuracy. Despite the importance of judgment and promotions, the literature devoted to study their relationship on forecasting performance is scarce. We analyze managerial adjustments accuracy under periods of promotions, based on weekly data from a manufacturing company. Intervention analysis is used to establish whether judgmental adjustments can be replaced by multivariate statistical models when responding to promotional information. We show that judgmental adjustments can enhance baseline forecasts during promotions, but not systematically. Transfer function models based on past promotions information achieved lower overall forecasting errors. Finally, a hybrid model illustrates the fact that human experts still added value to the transfer function models.
KW - Demand forecasting
KW - Judgmental adjustments
KW - Promotions
KW - Transfer function
KW - Intervention analysis
U2 - 10.1016/j.ijforecast.2012.10.002
DO - 10.1016/j.ijforecast.2012.10.002
M3 - Journal article
VL - 29
SP - 234
EP - 243
JO - International Journal of Forecasting
JF - International Journal of Forecasting
SN - 0169-2070
IS - 2
ER -