Profit From Your Forecasting Software

CHAPTER 9Judgmental Interventions: When Are They Appropriate?: When Are They Appropriate?

9.1 INTRODUCTION

Despite what a hardened mathematician might tell you, all forecasts involve judgment to some extent. Even the most sophisticated mathematical models will involve judgment on the choice of forecasting method, how much past data should be used to fit the model, how the accuracy of the model should be measured, and how far ahead it's safe to forecast. However, in this chapter we will focus on another role of judgment – its role in changing or overriding the output of computer-based forecasts.

Researchers have found that such interventions are very common. Managers changed over 90% of their computer-generated demand forecasts in one well-known food company I visited with colleagues. Other companies we visited changed over 60% of their forecasts. Survey after survey has confirmed that managers just cannot keep their hands off the forecasts appearing on their computer screens, despite the time and tedium involved in changing hundreds of forecasts.

So why are people so keen to overrule the indications of their software? There are a number of reasons. Sometimes the computer's forecasts are politically unwelcome. Forecast a downward trend in sales and senior managers might not be too happy, or your department's budget might be cut. Better to adjust the forecasts upwards and hope that your forecasts will be forgotten by the time the actual sales figures arrive.

Alternatively, if ...