Reviews of Important Papers on Forecasting,
1985-1995 Reviews
Review of:

Brian P. Mathews and A. Diamantopoulos (1986), "Managerial intervention in forecasting: An empirical investigation of forecast manipulation," International Journal of Research in Marketing, 3.

This study examined short-range forecasts for 281 repeat purchase products for a single company ‘operating in the U.K. health care industry’. These products represent all those for which management thought it worthwhile to make a subjective revision to the forecast provided by Holt’s two-parameter exponential smoothing. The forecasts were prepared six weeks prior to the start of the quarter. The revisions were made by the product managers. (Each revision was based on only one subjective revision, but a total of four product managers were involved.) Eight error measures were used; of these, three showed no significant difference, four (absolute error, R2, percentage better, and size of the improvement) showed that the subjective revisions were significantly better, and the last (percentage error) showed that the subjective revisions were significantly worse. The authors concluded that the revisions helped in this case. While this study represents a useful first step on an important problem, these results provide only weak support for subjective revisions because they were drawn from only one company, one starting point, limited information on why the subjective revisions should be better in this situation, and mixed results.