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Analysis of judgmental adjustments in the presence of promotions

Trapero Arenas, Juan and Pedregal, Diego J. and Fildes, Robert and Kourentzes, Nikolaos (2013) Analysis of judgmental adjustments in the presence of promotions. International Journal of Forecasting, 29 (2). pp. 234-243. ISSN 0169-2070

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    Abstract

    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.

    Item Type: Article
    Journal or Publication Title: International Journal of Forecasting
    Additional Information: The final, definitive version of this article has been published in the Journal, International Journal of Forecasting 29 (2), 2013, © ELSEVIER.
    Uncontrolled Keywords: Demand forecasting ; Judgmental adjustments ; Promotions ; Transfer function ; Intervention analysis
    Subjects: H Social Sciences > HB Economic Theory
    Departments: Lancaster University Management School > Management Science
    ID Code: 60238
    Deposited By: ep_importer_pure
    Deposited On: 23 Nov 2012 09:12
    Refereed?: Yes
    Published?: Published
    Last Modified: 02 Jan 2013 08:53
    Identification Number:
    URI: http://eprints.lancs.ac.uk/id/eprint/60238

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