The effects of scenarios on judgmental demand forecasts and the subsequent production decisions

In production planning and inventory management activities, demand forecasts play a crucial role by shaping the decisions of how many to produce from different products subject to a fixed total capacity restriction. Such demand predictions can be supported by the presence of optimistic and pessimistic scenarios that provide a vibrant narrative to envisage the future. In this paper, through an experimental study, we are investigating i) the effects of providing only time-series information on the generation of judgmental demand forecasts and the subsequent production order decisions and ii) the interaction of presenting optimistic and pessimistic scenarios with this forecast generation and ordering process. The experimental design involved three between subject groups: i) only time-series information, no scenarios ii) time series information accompanied with weak optimistic and pessimistic scenarios iii) time series information accompanied with strong optimistic and pessimistic scenarios. Findings are disclosed and directions for future extensions are suggested.