Forecast decisions

Demand forecasts are the key input to many crucial planning tasks, yet such forecasts are strongly and frequently influenced by human judgment. This chapter reviews and summarizes research on behavioral aspects of forecasting, including aspects of both individual decision-making and organizational decision-making. In particular, this chapter highlights some of the difficulties and assumptions inherent to the task. It discusses point forecasting, estimating uncertainty, and forecasting within and between organizations. It provides an overview of research on improving judgmental forecasting, including providing feedback and guidance to forecasters, specific elicitation methods, group-based forecasting methods, and interaction with statistical forecasts. Future research opportunities include methods for incorporating promotions into forecasts, mitigating algorithm aversion, and including organizational stakeholder perspectives and practices such as sales and operations planning.