What are the differences between nonquantitative and quantitative forecasting methods? Describe the two types of nonquantitative methods.
What will be an ideal response?
Nonquantitative forecasting methods, or subjective forecasts, rely heavily on the expert judgment of knowledgeable individuals inside and outside of the organization. Two common nonquantitative approaches are:
A sales force composite method asks each member of the sales force for his or her best estimate of sales for their individual territories over the coming year. Managers assess and adjust each individual forecast, and then aggregate them into an overall forecast.
Alternatively, firms may develop a forecast based upon a survey of buying intentions for each product from a sample of their customer base.
Quantitative forecasting methods commonly apply algorithms to estimate sales in future periods. These algorithms are computed from advanced statistical analysis of historical data of sales for each product, or sales of similar products and services. Firms either can develop their own proprietary algorithms or can hire consultants to apply them.
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