Qualitative forecasting techniques

Overview

Qualitative forecasting, intuition as a forecasting technique and one advantage of relying on managerial intuition.

What you need to know

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Questions from this subtopic

Each one with the model answer underneath.

1. 1

   What is qualitative forecasting?

   Model answer

   Qualitative forecasting predicts future sales from judgement, experience and opinion rather than from numerical data. Managers use the approach where past figures are missing or unreliable.

2. 2

   When is qualitative forecasting more appropriate than a quantitative technique?

   Model answer

   Qualitative methods suit a new product with no sales history to extrapolate. Rapidly changing markets also defeat any technique built on past figures.

3. 3

   What is meant by intuition as a forecasting technique?

   Model answer

   Intuition is a prediction based on the experience and instinct of an individual manager. A formal analysis of data does not lie behind the judgement.

4. 4

   State one advantage of relying on managerial intuition.

   Model answer

   Intuition costs nothing and produces an answer immediately. An experienced manager may read a market that the data cannot yet capture.

5. 5

   State one drawback of relying on managerial intuition.

   Model answer

   Intuition is subjective and cannot be checked or repeated by anyone else. Personal bias and overconfidence can push the figure a long way out.

6. 6

   What is brainstorming as a forecasting technique?

   Model answer

   A brainstorming session gathers a group to generate ideas and predictions freely without criticism. Quantity of ideas is encouraged first and evaluation follows afterwards.

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