To plan or not to plan?

Posted on June 3, 2007. Filed under: Uncategorized |

roundtable.jpgWEIGHING THE COSTS AND BENEFITS OF PLANNINGDecision Science News is noticing the importance of efficient forecasting and planning as it applies in the corporate world. The benefits of effective forecasting can decrease the amount of time, increase income, and manage manpower that is spent on predicting future trends in areas such as the economy and politics, among others. In the article titled “Forecasting and Planning: and Evaluation” by Robin M. Hogarth and Spyros Makridakis, they defined planning as “future oriented decision making” which involves values and goals, but more importantly the forecasting and assessment of alternative actions.

Hogarth and Makridakis discuss many external factors that can also influence the effectiveness of acquiring and implementing forecasted actions such as: the mode of presentation, the frequency in which the information is presented and social pressures. In order to achieve the most accurate forecasting, the authors illustrate the proper model of conceptual judgement in Figure One.

The article states that forecasting and planning is most effective when it plays a secondary role in decision making. It increases the “illusion of control” which can help a person make more confident decisions; but when an organization attempts to acquire too much information, the effectiveness of forecasting and planning decreases.

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