Question

What are the differences between nonquantitative and quantitative forecasting methods? Describe the two types of nonquantitative methods.

Answer 1

Quantitative forecasting methods are forecasting methods which uses historical data for forecasting. Historical data include financial report, production, revenue figures, seasonal sales data, customer data etc. Along with the past data it uses various factors influencing the demand and alalytical techniques for estimating future demand.Quantitative forecasting is highly dependent on mathematical calculations. Qantitative forecasting is more reliable than qualitative forecasting. Hence, long term forecasts are usually done with quantitative forecasting techniques. Quantitative forecasting techniques are mainly two types time series model and associative model. Time series model include moving average, exponential smoothing, and trend projection methods. Associative model include linear regression .
Non quantitative / Qualitative forecasting methods are forecasting methods which uses subjective information for forecasting and uses a summative approach. Subjective information is got from opinions of experts and people who have experience in that field. It is based on intuition and judgement and does not use historical data. Hence it is used when it is hard to capture data, or when no information is available. Qualitative forecasting is done with the help of interviews, observation, focus groups etc. It can incorporate the latest changes happening around very easily. It is highly subjective and non mathematical so the forecast can be biased which will lead to low accuracy.
Two types of qualitative forecasting
1) Delphi method
Delphi method is developed by rand corporation. It is a qualitative forecasting method which provides a group consensus after multiple rounds of questionnaire given to experts. In this method , forecast is made from a structured group of individuals called experts. Questionnaire is sent to experts in several rounds, and their anonymous answers are combined to form 'group response'. After each round these group responses are shared with them and they are allowed to modify them in following rounds. Finally the panel will give a result which the group think as a whole. Here the opinions are aggregated from a diverse set of experts hence provides a reliable opinions.
2) Market survey/ research
Market research is qualitative forecasting technique which retrieve information from potential and current customers. The customers are asked with question such as future purchasing plan, feed back on current product so that it will help to improve the product design and planning for new products. Customers know their requirements and can give valuable information. Surveys are conducted by interviewing ,through phone , social media, marketing campaign etc. And these information from customers are used in statistical analysis.