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Forecasting Guide
Overview
Categories
Selecting the Approach
Combining Approaches
Judgmental Models
Delphi Method
Curve Fitting
Analogous Data
Time Series Models
Moving Average
Exponential Smoothing
Decomposition Models
Box-Jenkins Models
Regression
Leading Indicator
Input-Output Models
TECHNIQUE #2: Delphi Method

BASIC IDEA: Opinions in group settings can be influenced by many things, including the dominant positions of some participants, personal magnetism, "alleged expertise", and fringe opinions. Manytimes, this hurts the ability to have an unbiased forecast provided by other judgemental techniques (in particular, the Jury of Executive Opinion). The Delphi method attempts to lessen these potential biases when making judgemental forecasts.

PROCEDURE: This procedure is handled by a "Coordinator"

1. Panel of "experts" selected

2. Initial set of questions sent to all participants

- for example, ask them for sale and/or revenue estimates, likelihood that these estimates will be realized, minimum and maximum estimates + reasons for these estimates

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3. The coordinator then tabulates the results

- for example, expected or average sales, etc.

4. Results are then returned to each participant along with anonymous statements

5. Continues until little or no change occurs.

EXAMPLE: For the same information services company in the previous example, mainframe computer forecasting using the Delphi method would be conducted by having the Service director (1) ask all participants to anonymously submit forecast estimates, (2) tabulate the results, (3) return these tabulated results to the participants, telling them to what extent there was general consensus, and asking them to state their reasons for any widely divergent estimates they had made and resubmit an updated anonymous forecast estimate, (4) cycle through stages (2)-(4) until a general consensus emerges.

COMMENTS: Benefits to this approach:

• Eliminates need for group meetings

• Alleviates some of the bias inherent in group meetings

• Participants can change their minds anonymously

Weaknesses:

• Can take a lot of time to reach consensus

• Participants may drop out

 


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