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Incorporating Judgments in Sales Forecasts: Application of the Delphi Method at American Hoist & Derrick

Author

Listed:
  • Shankar Basu

    (Marketing Analysis, American Hoist and Derrick Co., St. Paul, Minnesota)

  • Roger G. Schroeder

    (Graduate School of Business Administration, University of Minnesota, Minneapolis, Minnesota)

Abstract

In many organizations complete reliance on historical data is not an adequate basis for forecasting future sales. Since underlying conditions or assumptions may be changing, a means of incorporating management judgment in sales forecasts is needed. This paper reports on the development and application of a Delphi method (“opinion methodology”) for sales forecasting at the American Hoist and Derrick Company. Although the Delphi method has only been in use for one year, the sales forecast error for 1975 was reduced to less than 1 percent, whereas sales forecast errors for the previous ten years were significantly higher.

Suggested Citation

  • Shankar Basu & Roger G. Schroeder, 1977. "Incorporating Judgments in Sales Forecasts: Application of the Delphi Method at American Hoist & Derrick," Interfaces, INFORMS, vol. 7(3), pages 18-27, May.
    • Handle: RePEc:inm:orinte:v:7:y:1977:i:3:p:18-27
    DOI: 10.1287/inte.7.3.18
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    Cited by:

    1. Tsusaka, Takuji W. & Velasco, Ma. Lourdes & Yamano, Takashi & Pandey, Sushil, 2015. "Expert Elicitation for Assessing Agricultural Technology Adoption: The Case of Improved Rice Varieties in South Asian Countries," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 12(1), pages 1-15, June.
    2. Zanakis, Stelios H. & Mandakovic, Tomislav & Gupta, Sushil K. & Sahay, Sundeep & Hong, Sungwan, 1995. "A review of program evaluation and fund allocation methods within the service and government sectors," Socio-Economic Planning Sciences, Elsevier, vol. 29(1), pages 59-79, March.
    3. Kauko, Karlo & Palmroos, Peter, 2014. "The Delphi method in forecasting financial markets— An experimental study," International Journal of Forecasting, Elsevier, vol. 30(2), pages 313-327.
    4. Marcin Kozak & Olesia Iefremova, 2014. "Implementation Of The Delphi Technique In Finance," "e-Finanse", University of Information Technology and Management, Institute of Financial Research and Analysis, vol. 10(4), pages 36-45, May.
    5. João Lourenço Marques & Eduardo Anselmo Castro & Arnab Bhattacharjee, 2012. "Methods and models of analysis in the urban housing market," Chapters, in: Roberta Capello & Tomaz Ponce Dentinho (ed.), Networks, Space and Competitiveness, chapter 7, pages 149-180, Edward Elgar Publishing.
    6. Sovan Mitra, 2013. "Scenario Generation For Operational Risk," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 20(3), pages 163-187, July.

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