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Assignment 2: Internet Field Trip Pamela L. Williams Quantitative Methods MAT 540 Strayer University Dr. Albert Yin February 3, 2013

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Forecasting Methods The Delphi Method Delphi is a method of soliciting and aggregating individual opinions or judgments, typically of a group of experts, to arrive at consensus views concerning such things as what may happen in the future. Also known as the Delphi technique, this method seeks to rectify the problems of face-to-face confrontation in the group, so the responses and respondents remain anonymous. The classical technique proceeds in well-defined sequence. In the first round, the participants are asked to write their predictions. Their responses are collated and a copy is given to each of the participants. The participants are asked to comment on extreme views and to defend or modify their original opinion based on what the other participants have written. Again, the answers are collated and fed back to the participants. In the final round, participants are asked to reassess their original opinion in view of those presented by other participants. The Delphi method general produces a rapid narrowing of opinions. It provides more accurate forecasts than group discussions. Furthermore, a face-to-face discussion following the application of the Delphi method generally degrades accuracy. (Methods and Approaches of Futures Studies) Environmental Scanning Environmental scanning refers to the process of scanning the media to identify emerging issues to enable organizations or individuals to anticipate and respond to changes in the external environment. Scanning is meant to provide strategic intelligence to the strategic planning process by identifying changing trends and potential developments, monitoring them, forecasting their future pattern and assessing their impacts. The objective of scanning is to look over the widest range of possible factors and to identify connections with the organization's function or business, and especially to identify the significant positive or negative effects those could have on the

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organization and its activities. Scanning may be active or passive. Passive scanning is what most people do when they read journals or newspapers. (Methods and Approaches of Futures Studies) Judgmental Method Judgmental Forecasting is the most common method of actual Forecasting. Especially when the decision to be undertaken is critical and exact data required is unavailable or unreliable. Such methods are particularly useful when historical data is scarce. This method is used when the forecaster views himself as an expert in the area. Judgmental Forecasting may be based on theory and/or actual analysis of data, but, no formal decision rule exists to lead to ultimate forecast. It is sometimes argued that subjective analysis is useful in times of structural change as statistical methods are too slow to pick up the change .These methods rely on expertise and intuition, rather than on statistical analysis of historical data. (Garrett & Leatherman) Genius forecasting This method is based on a combination of intuition, insight, and luck. Psychics and crystal ball readers are the most extreme case of genius forecasting. Their forecasts are based exclusively on intuition. Science fiction writers have sometimes described new technologies with uncanny accuracy. There are many examples where men and women have been remarkable successful at predicting the future. There are also many examples of wrong forecasts. The weakness in genius forecasting is that its impossible to recognize a good forecast until the forecast has come to pass. Some psychic individuals are capable of producing consistently accurate forecasts. Mainstream science generally ignores this fact because the implications are simply too difficult to accept. (Glenn, 1994) Consensus methods

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A variation of the judgmental approach is consensus forecasting. Here, experts familiar with factors affecting a particular type of revenue meet to discuss near-term conditions in order to reach agreement about what is likely to happen to revenue collections. Forecasting complex systems often involves seeking expert opinions from more than one person. Each is an expert in his own discipline, and it is through the synthesis of these opinions that a final forecast is obtained. One method of arriving at a consensus forecast would be to put all the experts in a room and let them "argue it out". This method falls short because the situation is often controlled by those individuals that have the best group interaction and persuasion skills. (Garrett & Leatherman) Cross-impact matrix method The cross-impact method is an analytical approach to the probabilities of an item in a forecasted set. Its probabilities can be adjusted in view of judgments concerning potential interactions among the forecasted items. We know from experience that most events and developments are in some way related to other events and developments. Relationships often exist between events and developments that are not revealed by univariate forecasting techniques. The cross-impact matrix method recognizes that the occurrence of an event can, in turn, affect the likelihoods of other events. Probabilities are assigned to reflect the likelihood of an event in the presence and absence of other events. The advantage of this technique is that it forces forecasters and policy-makers to look at the relationships between system components, rather than viewing any variable as working independently of the others. A single event, such as the production of power from the first atomic reactor, was made possible by a complex history of antecedent scientific, technological, political, and economic "happenings." In its turn as a precedent, the production of energy from the first atomic reactor

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influenced many events and developments following it. Many apparently diverse and unrelated occurrences permit or cause singular events and developments. From this interconnected flow are ever-widening downstream effects that interact with other events and developments. An event without a predecessor that made it more or less likely or that influenced its form is hard to imagine - or to imagine an event that, after occurring, left no mark. This interrelationship between events and developments is called "cross-impact." (Gordon, 1994) Scenario The scenario is a narrative forecast that describes a potential course of events. Like the cross-impact matrix method, it recognizes the interrelationships of system components. The scenario describes the impact on the other components and the system as a whole. It is a "script" for defining the particulars of an uncertain future. Scenarios consider events such as new technology, population shifts, and changing consumer preferences. Scenarios are written as longterm predictions of the future. A most likely scenario is usually written, along with at least one optimistic and one pessimistic scenario. The primary purpose of a scenario is to provoke thinking of decision makers who can then posture themselves for the fulfillment of the scenario(s). The three scenarios force decision makers to ask: 1) Can we survive the pessimistic scenario, 2) Are we happy with the most likely scenario, and 3) Are we ready to take advantage of the optimistic scenario? (Methods and Approaches of Futures Studies)

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References Answers Corporation, (2011), The American Heritage Dictionary of the English Language, 4th Edition, forecast, February 3, 2013 from web http://www.answers.com/topic/forecast FORECASTING, Learning Objectives, February 3, 2013 from web http://www.uoguelph.ca/~dsparlin/forecast.htm Garrett, T.A., Leatherman, J.C. , An Introduction to State and Local Public Finance Retrieved February 3, 2013 from web http://www.rri.wvu.edu/WebBook/Garrett/chapterfour.htm Glenn, Jerome C. (1994), Genius Forecasting, Intuition, and Vision by Jerome C. Glenn Retrieved February 3, 2013 from web http://www.agriperi.ir/AKHBAR/cd1/FORESIGHT%20METHODOLOGY %20%26%20FORECASTING/FORESIGHT%20METHODOLOGY/related %20articles/books/Future%20Research%20Methodology/17-genius.pdf Gordon, Theodore J.(1994) , Cross Impact Method by Theodore J. Gordon Retrieved February 3, 2013 from web http://www.agriperi.ir/AKHBAR/cd1/FORESIGHT %20METHODOLOGY%20 %26%20FORECASTING/FORESIGHT %20METHODOLOGY/related%20articles/books/Future%20Research %20Methodology/10-cross.pdf World Future Society, Methods and Approaches of Futures Studies Retrieved February 3, 2013 from web http://www.wfs.org/newmeth.htm