Skip to main content
SpringerLink
Log in
Book cover

Principles of Forecasting pp 405–416Cite as

Judgmental Adjustment of Statistical Forecasts

  • Chapter

Part of the book series: International Series in Operations Research & Management Science ((ISOR,volume 30))

Abstract

Judgmental and statistical forecasts can each bring advantages to the forecasting process. One way forecasters can integrate these methods is to adjust statistical forecasts based on judgment. However, judgmental adjustments can bias forecasts and harm accuracy. Forecasters should consider six principles in deciding when and how to use judgment in adjusting statistical forecasts: (1) Adjust statistical forecasts if there is important domain knowledge; (2) adjust statistical forecasts in situations with a high degree of uncertainty; (3) adjust statistical forecasts when there are known changes in the environment; (4) structure the judgmental adjustment process; (5) document all judgmental adjustments made and periodically relate to forecast accuracy; (6) consider mechanically integrating judgmental and statistical forecasts over adjusting.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   429.00
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   549.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   549.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Adam, E. E. and R. J. Ebert (1976), “A comparison of human and statistical forecasting,” AIIE Transactions, 8, 120–127.

    Google Scholar 

  • Angus-Leppan, P. and V. Fatseas (1986), “The forecasting accuracy of trainee accountants using judgmental and statistical techniques,” Accounting and Business Research, 16, 179–188.

    Article  Google Scholar 

  • Arkes, H. R. (2001), “Overconfidence in judgmental forecasting,” in J. S. Armstrong (ed.), Principles of Forecasting. Norwell, MA: Kluwer Academic Publishers.

    Google Scholar 

  • Armstrong, J. S. (1985), Long-Range Forecasting: From Crystal Ball to Computer. New York: John Wiley and Sons.

    Google Scholar 

  • Armstrong J. S. (2001), “Combining forecasts,” in J. S. Armstrong (ed.), Principles of Forecasting. Norwell, MA: Kluwer Academic Publishers.

    Google Scholar 

  • Armstrong, J. S. and F. Collopy (1998), “Integration of statistical methods and judgment for time series forecasting: Principles from empirical research,” in G. Wright and P. Goodwin (eds.), Forecasting with Judgement, pp. 269–293. New York: John Wiley. Full text at hops.wharton.upenn.edu/forecast

    Google Scholar 

  • Armstrong J. S., M. Adya and F. Collopy (2001), “Rule-based forecasting: Using judgment in time-series extrapolation,” in J. S. Armstrong (ed.), Principles of Forecasting. Norwell, MA: Kluwer Academic Publishers.

    Google Scholar 

  • Blattberg, R. C. and S. J. Hoch (1990), “Database models and managerial intuition: 50% model + 50% manager,” Management Science, 36, 887–899.

    Article  Google Scholar 

  • Carbone, R., A. Andersen, Y. Corriveau and P.P. Corson (1983), “Comparing for different time series methods the value of technical expertise, individualized analysis, and judgmental adjustment,” Management Science, 29, 559–566.

    Article  Google Scholar 

  • Carbone, R. A. and W. L. Gorr, (1985), “Accuracy of judgmental forecasting of time series,” Decision Sciences, 16, 153–160.

    Article  Google Scholar 

  • Clemen, R.T. (1989), “Combining forecasts: A review and annotated bibliography,” International Journal of Forecasting, 5, 559–83.

    Article  Google Scholar 

  • Collopy, F. and J.S. Armstrong (1992), “Expert opinion about extrapolations and the mystery of the overlooked discontinuities,” International Journal of Forecasting, 8, 575–582. Full text at hops.wharton.upenn.edu/forecast.

    Google Scholar 

  • Edmundson, R. H. (1990), “Decomposition: A strategy for judgmental forecasting,” Journal of Forecasting, 9, 301–324.

    Article  Google Scholar 

  • Edmundson, R. H., M. J. Lawrence and M. J. O’Connor (1988), “The use of non-time series information in sales forecasting: A case study,” Journal of Forecasting, 7, 201–211.

    Article  Google Scholar 

  • Eggleton, I.R.C. (1982), “Intuitive time-series extrapolation,” Journal of Accounting Research, 20, 68–102.

    Article  Google Scholar 

  • Fischhoff, B. (2001), “Learning from experience: Coping with hindsight bias and ambiguity,” in J. S. Armstrong (ed.), Principles of Forecasting. Norwell, MA: Kluwer Academic Publishers

    Google Scholar 

  • Harvey, N. and F. Bolger (1996), “Graphs versus tables: Effects of data presentation format on judgmental forecasting,” International Journal of Forecasting, 12, 119–137.

    Article  Google Scholar 

  • Hogarth, R. M. (1987), Judgment and Choice. New York: John Wiley.

    Google Scholar 

  • Huss, W. R. (1986), “Comparative analysis of company forecasts and advanced time-series techniques using annual electric utility energy sales data,” International Journal of Forecasting, 1, 217–239.

    Article  Google Scholar 

  • Lawrence, M. J., R. H. Edmundson and M. J. O’Connor (1985), “An examination of the accuracy of judgmental extrapolation of time series,” International Journal of Forecasting, 1, 25–35.

    Article  Google Scholar 

  • Lawrence, M. J., R. H. Edmundson and M. J. O’Connor (1986), “The accuracy of combining judgmental and statistical forecasts,” Management Science, 32, 1521–1532.

    Article  Google Scholar 

  • Lawrence, M. J. and M. J. O’Connor (1992), “Exploring judgmental forecasting,” International Journal of Forecasting, 8, 15–26.

    Article  Google Scholar 

  • Lawrence, M. J. and M. J. O’Connor (1996), “Judgment or models: The importance of task differences,” Omega, 24, 245–254.

    Article  Google Scholar 

  • Lim, J. S. and M. J. O’Connor (1996a), “Judgmental forecasting with time series and causal information,” International Journal of Forecasting, 12, 139–153.

    Article  Google Scholar 

  • Lim, J. S. and M. J. O’Connor (1996b), “Judgmental forecasting with interactive forecasting support systems,” Decision Support Systems, 16, 339–357.

    Article  Google Scholar 

  • Lobo, G. J. and R. D. Nair (1990), “Combining judgmental and statistical forecasts: An application to earnings forecasts,” Decision Sciences, 21, 446–460.

    Article  Google Scholar 

  • Mabert, V.A. (1976), “Statistical versus sales force-executive opinion short-range forecasts: Time-series analysis study,” Decision Sciences, 7, 310–318.

    Article  Google Scholar 

  • Mathews, B. P. and A. Diamantopoulos (1986), “Managerial intervention in forecasting: An empirical investigation of forecast manipulation,” International Journal of Research in Marketing, 3, 3–10.

    Article  Google Scholar 

  • Mathews, B. P. and A. Diamantopoulos (1989), “Judgmental revision of sales forecasts: A longitudinal extension,” Journal of Forecasting, 8, 129–40.

    Article  Google Scholar 

  • Mathews, B. P. and A. Diamantopoulos (1990), “Judgmental revision of sales forecasts: Effectiveness of forecast selection,” Journal of Forecasting, 9, 407–415.

    Article  Google Scholar 

  • McNees, S. K. (1975), “An Evaluation of economic forecasts,” New England Economic Review, 16, November-December, 3–39.

    Google Scholar 

  • McNees, S.K. (1990), “The role of judgment in macroeconomic forecasting accuracy,” International Journal of Forecasting, 6, 287–299.

    Article  Google Scholar 

  • Meehl, P.E. (1957), “When shall we use our heads instead of the formula?” Journal of Counseling Psychology, 4, 268–273.

    Article  Google Scholar 

  • O’Connor, M. (1989), “Models of human behavior and confidence in judgment,” International Journal of Forecasting, 5, 159–169.

    Article  Google Scholar 

  • Remus, W. (1987), “A study of graphical and tabular displays and their interaction with environmental complexity,” Management Science, 33, 1200–1204.

    Article  Google Scholar 

  • Saaty, T. (1980), The Analytic Hierarchy Process. New York: McGraw-Hill.

    Google Scholar 

  • Sanders, N. R. (1992), “Accuracy of judgmental forecasts: A comparison,” Omega, 20, 353–364.

    Article  Google Scholar 

  • Sanders, N. R. and K. B. Manrodt (1994), “Forecasting practices in U.S. corporations: Survey results,” Interfaces, 24, 91–100.

    Article  Google Scholar 

  • Sanders, N. R. and L.P. Ritzman (1991), “On knowing when to switch from quantitative to judgmental forecasts,” International Journal of Operations and Production Management, 11, 27–37.

    Article  Google Scholar 

  • Sanders, N. R. and L. P. Ritzman (1992), “The need for contextual and technical knowledge in judgmental forecasting,” Journal of Behavioral Decision Making, 5, 39–52.

    Article  Google Scholar 

  • Sanders, N. R. and L. P. Ritzman (1995), “Bringing judgment into combination forecasts,” Journal of Operations Management, 13, 311–321.

    Article  Google Scholar 

  • Turner, D. S. (1990), “The role of judgment in macroeconomic forecasting,” Journal of Forecasting, 9, 315–345.

    Article  Google Scholar 

  • Webby, R., M. O’Connor and M. Lawrence (2001), “Judgmental time-series forecasting using domian knowledge,” in J. S. Armstrong (ed.), Principles of Forecasting. Norwell, MA: Kluwer Academic Publishers

    Google Scholar 

  • Willemain, T. R. (1989), “Graphical adjustment of statistical forecasts,” International Journal of Forecasting, 5, 179–185.

    Article  Google Scholar 

  • Willemain, T. R. (1991), “The effect of graphical adjustment on forecast accuracy,” International Journal of Forecasting, 7, 151–154.

    Article  Google Scholar 

  • Winkler, R. L. and S. Makridakis (1983), “The combination of forecasts,” Journal of the Royal Statistical Society (A), 146, Part 2, 150–157.

    Google Scholar 

  • Wolfe, C. and B. Flores (1990), “Judgmental adjustment of earnings forecasts,” Journal of Forecasting, 9, 389–405.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Management Science & Information Systems, Wright State University, USA

    Nada R. Sanders

  2. Operations & Strategic Management, Boston College, USA

    Larry P. Ritzman

Authors
  1. Nada R. Sanders
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Larry P. Ritzman
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania, USA

    J. Scott Armstrong

Rights and permissions

Reprints and permissions

Copyright information

© 2001 Springer Science+Business Media New York

About this chapter

Cite this chapter

Sanders, N.R., Ritzman, L.P. (2001). Judgmental Adjustment of Statistical Forecasts. In: Armstrong, J.S. (eds) Principles of Forecasting. International Series in Operations Research & Management Science, vol 30. Springer, Boston, MA. https://doi.org/10.1007/978-0-306-47630-3_18

Download citation

  • DOI: https://doi.org/10.1007/978-0-306-47630-3_18

  • Publisher Name: Springer, Boston, MA

  • Print ISBN: 978-0-7923-7401-5

  • Online ISBN: 978-0-306-47630-3

  • eBook Packages: Springer Book Archive

Publish with us

Policies and ethics

Search

Navigation