While trying to move to incorporate quantitiative forecast techniques in a compa
ID: 1123443 • Letter: W
Question
While trying to move to incorporate quantitiative forecast techniques in a company where the sales VP produces a "best quess" qualitative forecast. What is the best approach to address the existing executive qualitative forecast method? You want to avoid suggesting that you will exclude the sales VP from the forecast process.
a) use exponential smoothing to demonstrate that quantitative methods produce less errors
b) use reression to combine qualitative forecasts with quantitiative forecasts to reduce errors
c) use multivariate regrssion model to demonstrate that it historically produces less error than the existing quantitative method
d) run all four quantitative methods and produce a forecast with the lowest error and challenge the qualitative forecast results
Explanation / Answer
Option (b) is the right answer.
As I cannot exclude sales VP from the forecast process, it is better to run regression with both qualitative and quantitative variables to reduce errors. Qualitative variables are represented as dummies to run the regression.
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