Abstract
This research proposes a novel demand forecasting method which will work effectively even in such circumstances where extrapolate-able demand patterns are hardly available. The method uses the market mechanism to aggregate tacit knowledge of the firm’s sales people on the future demand of a product into a continuous forecasted demand distribution. In order to make it work, the paper introduces a new type of prediction security and an original market maker algorithm suitable for the security, and furnishes them into an intra-firm prediction market system. As a result, sufficient liquidity is secured for the market even when the number of the traders is small, and the market maker can output at any time an aggregated demand forecast of the traders as a continuous distribution. An agent simulation model, where each trader has the log-utility function, is also developed to show how the method works, how quickly the output distribution converges, etc.
Please use the following format when citing this chapter Mizuyama, H., Kamada, E., 2007, in IFIP International federation for Information Processing, Volume 246, Advances in Production Management Systems, eds. Olhager, J., Persson, F., (Boston: Springer), pp. 197–204.
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Mizuyama, H., Kamada, E. (2007). A Prediction Market System for Aggregating Dispersed Tacit Knowledge into a Continuous Forecasted Demand Distribution. In: Olhager, J., Persson, F. (eds) Advances in Production Management Systems. IFIP — The International Federation for Information Processing, vol 246. Springer, Boston, MA. https://doi.org/10.1007/978-0-387-74157-4_23
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DOI: https://doi.org/10.1007/978-0-387-74157-4_23
Publisher Name: Springer, Boston, MA
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