Research Summary
Research Summary
Does the Adoption of Rolling Forecasts Improve Planning?
Description
This field study investigates the consequences of adopting rolling forecasts on organizational planning. Using quarterly product-line forecasted and realized sales data from several business units of a multinational biotechnology supplier, I find that subsequent to the use of rolling forecasts, forecast errors are more negative, suggesting the mitigation of sandbagging behaviors in setting forecasts. This effect is stronger in regions where there is greater information asymmetry. Furthermore, contrary to claims by practitioners and popular press, forecast accuracy actually worsens, particularly in regions exhibiting greater demand uncertainty, after rolling forecasts are put in place, suggesting that forecasters incorporate irrelevant information into their forecasts.