Model-based SKU-level forecasts are often adjusted by experts. In this paper we propose a statistical methodology to test whether these expert forecasts improve on model forecasts. Application of the methodology to a very large database concerning experts in 35 countries who adjust SKU-level forecasts for pharmaceutical products in seven distinct categories leads to the general conclusion that expert forecasts are equally good at best, but are more often worse than model-based forecasts. We explore whether this is due to experts putting too much weight on their contribution, and this indeed turns out to be the case.

expert forecasts, forecasting, model forecasts,
Journal of Forecasting
Erasmus Research Institute of Management

Franses, Ph.H.B.F, & Legerstee, R. (2010). Do experts' adjustments on model-based SKU-level forecasts improve forecast quality?. Journal of Forecasting, 29(3), 331–340. doi:10.1002/for.1129