Operations Management: An Integrated Approach, 5th Edition

COMBINING FORECASTS

One approach to forecasting that has been shown to result in improved forecast accuracy is to combine forecasts from two or more different forecasting methods. Studies have shown that combining forecasts can lead to forecast accuracy that is better than that of the individual forecasts. The forecasting methods that are combined should be different and can even be based on different information or data.

One of the simplest ways to combine is to use a simple average of the individual forecasts. Even though there are more sophisticated ways of combining, a simple average has been shown to be very effective in improving forecast accuracy.

LINKS TO PRACTICE Combining Methods in Weather Forecasting

The idea of relying on different types of forecasting methods and combining their results to get a final forecast has even been used by weather forecasters. Weather forecasting can be challenging, and many factors need to be considered, such as long-range trends and current weather fronts. Weather forecasters have been able to improve their forecast accuracy by combining the results of forecasts made at different time intervals. For example, a weather forecast for the upcoming weekend may be formulated by combining computer-generated forecasts made on the preceding Monday, Tuesday, and Wednesday. This method is called “ensemble forecasting” and has proven to be very successful. ...