Question

Why do organizations combine statistical and judgmental forecasts of labor demand, rather than relying on statistics or judgment alone? Give an example of a situation in which each type of forecast would be inaccurate. in your own words

Answer 1

To estimate labor demand, we should combine both statistical and judgmental forecast, here, we will not rely on only one like either statistical forecast or judgmental forecast, considering statistical forecast, we can use linear trend or regression forecasting techniques that will help to give us labor demand for future period, for example, for past data, we know labor demand of each month, next we can calculate slope and Intercept, then we can create forecast of any future month’s labor demand, we can check bias to understand whether such forecasting techniques can be accepted for the purpose of calculating labor demand,

Again, to using judgmental technique, here, we use expert opinion or human experience to forecast labor demand, here, expert uses knowledge, skills and gather data to forecast labor demand, we should use both together to get labor demand, using one we can’t forecast labor demand much accurately, as every statistical analysis and result has to be aligned with opinion of experts, hence, just one process will not be helpful, for example- due to bad weather condition, leadership team should adjust their recruitment and accounting process, here, we should take advice and apply opinion of management people to the statistical result that can bring out labor demand for the current period,