Incorporating Judgments in Sales Forecasts: Application of the Delphi Method at American Hoist & Derrick

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Abstract
In many organizations complete reliance on historical data is not an adequate basis for forecasting future sales. Since underlying conditions or assumptions may be changing, a means of incorporating management judgment in sales forecasts is needed. This paper reports on the development and application of a Delphi method (“opinion methodology”) for sales forecasting at the American Hoist and Derrick Company. Although the Delphi method has only been in use for one year, the sales forecast error for 1975 was reduced to less than 1 percent, whereas sales forecast errors for the previous ten years were significantly higher.

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