JUDGMENTAL FORECASTING

Judgmental Forecasting

Judgmental Forecasting

Introduction

This essay is based on summary of judgmental forecasting. Forecasting methods can be classified into two forms and dimensions such as the degree of freedom from the subjectivity of the forecasting process and analytic process. The extreme points of these measurements are subjective and objective methods. Judgmental forecasting is a process of predicting the future of the project on the basis of its actual current performance. Forecasting methods can be divided into various categories such as qualitative and quantitative (Lawrence, 2006).

The transition to forecasting methods in the market has contributed to a significant increase in uncertainty in economic phenomena, increased economic dynamism, and the notion of competition. In these circumstances, judgmental forecasting techniques are the elements of scientific prediction for further developments in the economy as a whole, in industries, regions, isolated markets, and individual enterprises as key economic entities. The value of judgmental forecasting depends on the experience and intuition of the person formulating the forecast.

Discussion and Analysis

Judgmental forecasting are subjective methods of forecasting which is called an expert method. The use of mathematical and statistical techniques in these methods is minimized, but priority is given to the set methods of evaluating phenomena using leading questions. Forecasting targets are determined on the basis of expert estimates. The decision maker who relies on judgmental foresting should have the experience, intuition, subjective expectations, and required education for making forecasts.

Judgmental forecasting is based on the vision, intuition, imagination and experience of the person who formulates it. Managers are asked to give an accurate assessment on the basis of the information available to them, for example in the form of probability indicators, accuracy or confidence in their assessments. The main drawback is the difficulty of communication and the inability to verify the truth or falsity the forecast. ...