Comparing and Contrasting Forecasting Methods
Companies use forecasting to help decide how to best spend funds for the next year, to predict if expansion is needed, to plan for how much of each product to produce within a certain period of time, and other decisions that effect the company's future plans. Qualitative, time series analysis, causal relationships, and simulation are the four basic types of forecasting (Chase, Jacobs, & Aquilano, 2006). The forecasting methods that will be compared and contrasted within this paper are the Delphi method (which is an example of qualitative), time series analysis, seasonal, and causal relationship forecasting.
The Delphi method is a judgmental forecasting method, which uses the evaluation of several experts within the field that is being analyzed to forecast company sales. The process starts by contacting several experts and asking them to participate in the study of the company. When multiple experts agree to join in the research, the company's material is sent to each specialist to evaluate, and are asked to send the findings and materials back to the company with suggestions and predictions attached. A company coordinator studies all of the information and forecasts, has key company executives make additional comments and reflections, then asks the experts if they want to make any changes to the information they provided. This will happen several times until all parties involved reach a consensus. "Forecasts based on a group of forecasts are better than forecasts of a single forecaster, particularly where no formal forecasting process exists?." (Ahamad & Ismael, 2003, p. 22). For the Delphi method to be used effectively, it is important to keep the identity of the experts used undisclosed, so those that a ...