Ch 4 Qualitative Forecasting

Using expert opinion and collective experience to unlock the secrets of the future.

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The keys to employing qualitative forecasting are:
 Data as an historical

series is not available,or is not relevant to future needs.
 An unusual product or a

unique project is being contemplated.
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Keys: There are numerous variables

which will affect the project.

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Keys:
 The project’s life is longer than the

safe extrapolation of a time series.
Sales by Year, With Automatic Twenty Year Prediction
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Keys:
 Experts are available, and should

debate the issues.

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Qualitative Forecasting: Data From Expert Opinion
By Survey Data can be gathered by phone or in writing.  Data comes in three categories: 1. Highly valuable 2. Absolutely essential 3. Supporting material.  The survey group is known as the ‘reference population’.

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Qualitative Forecasting: Data From Expert Opinion
 Jury of executive opinion: senior managers

Using groups-

draw upon their collective wisdom to map out future events. These discussions are carried out in open meeting, and may be subject to the drawbacks of group think and personality dominance.

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Qualitative Forecasting: Data From Expert Opinion
Using groups The Delphi Method: drawing upon the group’s expertise by getting individual submissions, without the drawback of face to face meetings. The Delphi Method is named after a famous Oracle who prophesied in the ancient Greek city of Delphi. An Oracle (wise person) interceded between men and gods.

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Qualitative Forecasting: Data From Expert Opinion
Using groups  The Nominal Group Technique is a

face to face Delphi method, allowing group discussion.
 The Devils Advocate method poses sub-

groups to question the group’s findings.
 The Dialectical Inquiry method poses

sub-groups to challenge the group’s findings with alternative scenarios.
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Qualitative Forecasting: Using Expert Opinion
1. Output from the group techniques is

sorted into scenarios.
2. These scenarios are further reviewed by

the group.
3. A final ‘consensus of opinion’ forecast is

accepted by the group.

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Qualitative Forecasting: Summary
Qualitative forecasting is used when historical data is not available, or when the planning horizon is very long.  Qualitative forecasting uses expert opinion, collected in a variety of ways. Collected expert wisdom has to be carefully managed. Research shows that both the Delphi Method, and the Nominal Group technique, are reliable forecast methods.
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