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Do experts' adjustments on model-based SKU-level forecasts improve forecast quality?

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  • Philip Hans Franses

    (Econometric Institute, Erasmus University, Rotterdam, The Netherlands)

  • Rianne Legerstee

    (Econometric Institute, Erasmus University, Rotterdam, The Netherlands)

Abstract

Model-based SKU-level forecasts are often adjusted by experts. In this paper we propose a statistical methodology to test whether these expert forecasts improve on model forecasts. Application of the methodology to a very large database concerning experts in 35 countries who adjust SKU-level forecasts for pharmaceutical products in seven distinct categories leads to the general conclusion that expert forecasts are equally good at best, but are more often worse than model-based forecasts. We explore whether this is due to experts putting too much weight on their contribution, and this indeed turns out to be the case. Copyright © 2009 John Wiley & Sons, Ltd.

Suggested Citation

  • Philip Hans Franses & Rianne Legerstee, 2010. "Do experts' adjustments on model-based SKU-level forecasts improve forecast quality?," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 29(3), pages 331-340.
    • Handle: RePEc:jof:jforec:v:29:y:2010:i:3:p:331-340
    DOI: 10.1002/for.1129
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    References listed on IDEAS

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