By its very nature, forecasting is often a politically charged activity. Strateg
ID: 371026 • Letter: B
Question
By its very nature, forecasting is often a politically charged activity. Strategic decisions, resource allocations, and careers may hinge on the way things are predicted rather than the way they actually turn out. The forecaster is often placed in the uncomfortable position of being the one who bears bad news or who contradicts the official positions of others in the organization. Furthermore, it is often possible to bias a forecast in one direction or another by unduly restricting the class of models or the set of explanatory variables which are investigated, by varying the length of the sample which is fitted, by deciding to include or suppress influential observations, by focusing on short-term trends rather than long-term trends or vice versa, and so on. An analyst who is clever and unscrupulous--or merely careless and easily intimidated--can consciously or unconsciously steer a forecast in a politically convenient direction. Read the scenario below and explain how you will handle this situation. Defend your position. Be realistic, your job may depend on this. Be very specific in your response.
The advertising agency for which you work is trying to renew its contract with an important client. The client has been balking, claiming that your ad campaigns have been less successful than promised, and that sales growth has been disappointing. Your boss gives you this mandate: "Run me some numbers to show these guys that our ads are really working. Their slow-down in sales could be part of an industry-wide pattern. We have a bunch of comparative data on what's been happening in markets where our ads been shown and markets where they haven't." You analyze the data and discover that the effect of your ads on sales has on the whole been insignificant. However, there is one market in which sales showed a huge upward spike in the week in which your ads began showing there. Privately, you believe this was due to the NFL playoff game which just happened to be held there at the same time. However, if this market is simply aggregated with all the others without calling attention to that fact
Explanation / Answer
Integrity and commitment earn respect in the organization.make sure that your forecasting model stand by it.a forecaster should follow good modelling practices like out of sampel validation etc.if the forecaster has maintained a clean data of that market in which sales showed a huge upward spike because of your ads,then its influence on sales would be visisble to the client and it will supress the leass significant numbers.the reason behind the ad being successful in that market was that the advertisement has been associated with something of much gretaer interest to the piublic.the most reasonable approach is to sho accurate numbers and be truthful to your boss instead of being bias in representing numbers.learn from the cause of such inefficiency and call attentions to the underlyibng assumptions.
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