Sales forecasting is an important part of business. Sales forecasts are crucial in developing business plans, production schedules, budgets, advertising and marketing plans, etc. as the forecasts drive decisions around sales prices, production costs, strategic operations and more (Hicham, Mohammed, & Anas, 2012). The Delphi Method as described by Dalkey and Helmer (1963) utilizes questionnaires to gather key information from a variety experts to form a consensus. Businesses are then able to use this information in their long-range forecasting (Sharp, n.d.). This work will discuss the Delphi Method and how it is utilized in sales forecasting in businesses today.
The Delphi Method
In the 1950s, the United States Air Force sought to answer strategic questions that were difficult to test. In order to determine the amount of munitions needed to take out certain targets, the military employed several strategic analysts to tackle the problem by utilizing a series of questionnaires (Dalkey & Helmer, 1963). The developers of the technique wanted to allow panel members “to conceptualize in realistic terms the problems on which they were working, rather than in theoretical terms” (Sharp, n.d., para. 7). In order to do this, panelists would be given questionnaires that addressed a specific question. The participants were then asked to give their responses as well as insight on how they reached those answers. Panelists were allowed to utilize their own research but were discouraged from discussing the work with anyone else. They were also allowed to ask questions of the researchers that would help answer the initial question. The information is gathered from the panelists, reviewed and then follow up questions are asked. The question and answer portion continues until there is consensus of the experts (Dalkey & Helmer, 1963). The Delphi method assumes that the collective group of experts is more knowledgeable than an individual and utilizes their collective knowledge to form consensus (Ismail & Ahamad, 2003).
Sharp (n.d.) states that the Delphi method is best used to “solve problems that require evaluative, qualitative answers rather than precise, quantative results” (para. 20). Sharp (n.d.) also notes that the Delphi method is versatile, used in a wide range of business environments, and can save money especially in travel. The author notes downsides to the method are that it is time consuming, difficult to design, and the anonymity can reduce accountability. The author also cautions that the method should be used for problem-solving and not confused as policy. Sharp (n.d.) acknowledges that evolution in computers and their application has increase the applications...