Manufacturing and Service Operations Management 2000

Why Are Forecast Updates Often Disappointing?

Kyle Cattani¹; Warren H. Hausman²

¹ University of North Carolina at Chapel Hill · ² Stanford University

Abstract

Demand forecasts do not become consistently more accurate as they are updated. We present examples demonstrating this counterintuitive phenomenon and some theoretical results to explain its occurrence. Specifically, we analyze the effect of demand randomness on forecast-update performance. A surprising result is that under various theoretical models involving demand randomness alone, updated forecasts will be less accurate between 30% and 50% of the time.

DOI

10.1287/msom.2.2.119.12354

Sources

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APA 7 MLA 9 Chicago (author–date) Harvard Elsevier Harvard (JFE, JBF…) The Accounting Review Academy of Management American Marketing Association INFORMS (Management Science) Copy citation Copied ✓