Posted on by Judy

Forecasting is critical to understanding future demand in an organization. Please discuss which type of forecasting approach has more impact; qualitative or quantitative. What member or members within the organization should be a part of the forecasting process? How would this member or members manage a poor forecast?

QUALITATIVE AND QUANTITATIVE DEMAND FORECASTING
A qualitative demand forecasting utilizes expert opinions which make them subjective. Such opinions are based on the experience and skills of experts. A qualitative forecasting can be used when there is no sufficient historical data to make predictions. They can be used during the introduction stages of a product when there is no sufficient data to make predictions. These expert opinions are backed by interpretation of data. For example, if a company wants to predict the sales for next year, it might study the impact of advertising campaigns and the impact of technology on consumer buying behavior.
A quantitative demand forecasting is based on numbers and historical data available from the previous years. It is more objective in nature. For example, in order to predict sales for next year, seasonal sales data of previous years can be utilized. It also utilizes techniques like trend analysis. Unlike a qualitative prediction, a quantitative prediction is more detail oriented. However, when environmental conditions affect the time under consideration, it is hard to use past data to make predictions. In such cases, a qualitative forecasting is used which is more effective and has more impact on the forecasting.
The advantage of using a qualitative prediction is that it would give more accurate predictions but will be lacking in details and scientific support. When the data is made quantifiable it will lose accuracy, but more and more details will be available.
A qualitative forecasting enables managers to be more flexible in making forecasting using their experiences and judgement which a quantitative data cannot identify.
Thus in terms of making more accurate predictions, a qualitative forecasting is more accurate and has more impact than a quantitative forecasting approach.
To conclude, a qualitative forecasting has more impact in forecasting.
The participating members of forecasting process include business experts such as sales consultants, marketing experts, statisticians, business analysts, economists etc. A forecast is determined based on whether historical data is available or not. If historical data is available for predicting sales for next year, they may resort to quantitative forecasting or trend analysis. If past data is not available, the experts will resort to qualitative forecasting utilizing their experience and knowledge in forecasting sales which would be more accurate.
 
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