Question

Question: What category of forecasting techniques uses managerial judgment in lieu of numerical data?

Short answer

Answer

Forecasting is the basis of corporate planning and control, and for taking each management, decision forecasting plays a major role in every business organization.

Step-by-step solution

Forecasting techniques

Forecasting techniquescan be qualitative or quantitative. Qualitative techniquesof forecasting use managerial judgment for estimating demand, and quantitative techniques of forecasting use quantitative forecasting models for estimating demand

Category of forecasting techniques uses managerial judgment instead of numerical data

The qualitative forecasting technique uses managerial judgment instead of numerical dataand generally takes advantage of the knowledge of experts and needs much judgment. These techniques typically include processes that are well defined.

For example, in the case of forecasting the demand for new fashion merchandise in a retail store, the firm can include a combination of input from typically customers expressing preferences and from store managers who understand product mix and store volumes, where they view the merchandise and run through a series of exercises designed to bring the group to a consensus estimate.

The point is that there are no wild guesses about the expected demand, but it involves a well-thought-out and judgmental and structured decision-making approach. Following are the samples of qualitative techniques of forecasting:-

1. Market research
2. Panel consensus
3. Historical analogy
4. Delphi method