Use and misuse of information in supply chain forecasting of promotion effects

Robert Fildes, Paul Goodwin, Dilek Önkal

Research output: Contribution to journalArticle

7 Citations (Scopus)
8 Downloads (Pure)

Abstract

Demand forecasting is critical to sales and operations planning (S&OP), but the effects of sales promotions can be difficult to forecast. Typically, a baseline statistical forecast is judgmentally adjusted on receipt of information from different departments. However, much of this information either has no predictive value or its value is unknown. Research into base rate discounting has suggested that such information may distract forecasters from the average uplift and reduce accuracy. This has been investigated in situations in which forecasters were able to adjust the statistical forecasts for promotions via a forecasting support system (FSS). In two ecologically valid experiments, forecasters were provided with the mean level of promotion uplift, a baseline statistical forecast, and quantitative and qualitative information. However, the forecasters were distracted from the base rate and misinterpreted the information available to them. These findings have important implications for the design of organizational S&OP processes, and for the implementation of FSSs.

Original languageEnglish
Pages (from-to)144-156
Number of pages13
JournalInternational Journal of Forecasting
Volume35
Issue number1
Early online date19 Feb 2018
DOIs
Publication statusPublished - 1 Jan 2019

    Fingerprint

Keywords

  • Behavioral operations
  • Forecaster behavior
  • Information effects
  • Judgmental forecasting
  • Sales and operations planning

ASJC Scopus subject areas

  • Business and International Management

Cite this