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Unit 4: Forecasting and Premising

4.1.6 Combining Forecasts Notes

It seems clear that no forecasting technique is appropriate for all situations. There is substantial
evidence to demonstrate that combining individual forecasts produces gains in forecasting
accuracy. There is also evidence that adding quantitative forecasts to qualitative forecasts reduces
accuracy. Research has not yet revealed the conditions or methods for the optimal combinations
of forecasts.

4.1.7 Difficulties in Forecasting Technology

Clarke describes our inability to forecast technological futures as a failure of nerve. When a
major technological breakthrough does occur, it takes conviction and courage to accept the
implications of the finding. Even when the truth is starring us in the face, we often have difficulty
accepting its implications.
Clark refers to this resistance to change as cowardice, however, it may be much deeper. Cognitive
dissonance theory in psychology has helped us understand that resistance to change is a natural
human characteristic. It is extremely difficult to venture beyond our latitudes of acceptance in
forecasting new technologies.
Clarke states that knowledge can sometimes clog the wheels of imagination. He embodied this
belief in his self-proclaimed law:
"When a distinguished but elderly scientist states that something is possible, he is almost certainly
right. When he states that something is impossible, he is very probably wrong."
Nearly all futurists describe the past as unchangeable, consisting as a collection of knowable
facts. We generally perceive the existence of only one past. When two people give conflicting
stories of the past, we tend to believe that one of them must be lying or mistaken.

Caselet Need for Accurate Forecast

ikram Patil (Patil), Marketing Manager of Tera Air Cooler Manufacturing,
Hyderabad, was going through the sales figures of the company products. He
Vfound that there was a significant variation between the sales forecasts and the
actual sales figures. As a result, inventory management was becoming a problem.
He began studying the past forecasts and sales figures to understand whether this was a
one-time occurrence or it had been a regular feature. He found that in the last three years,
the forecasts were always at variance with the actual sales Figures. He then started analyzing
the reasons for this, but, he failed to understand why the forecasts were off target so
consistently.
In the mean time, he got a call from Anil Deshpandey (Deshpandey), Production Manager
asking him about the forecasts for the next six months. Patil told him that it would take
some time for him to give the figures because he was thinking of making certain
improvements in the forecasting process. Taking this to be an admission, that something
was wrong in the way sales were being forecasted by the marketing department,
Deshpandey immediately expressed his feelings and narrated the problems his department
had been facing because of inaccurate forecasts.

Contd...

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