In this method of demand forecasting, the firm makes an effort to obtain the opinion of experts who have long standing experience in the field of enquiry related to the product under consideration. If the forecast is based on the opinion of several experts then the approach is called forecasting through the use of panel consensus. Although the panel consensus method usually results in forecasts that embody the collective wisdom of consulted experts, it may be at times unfavorably affected by the force of personality of one or few key individuals.
To counter this disadvantage of panel consensus, another approach is developed called the Delphi method. In this method a panel of experts is individually presented a series of questions pertaining to the forecasting problem. Responses acquired from the experts are analyzed by an independent party that will provide the feedback to the panel members. Based on the responses of other individuals, each expert is then asked to make a revised forecast. This process continues till a consensus is reached or until further iterations generate no change in estimates.
The advantage of Delphi technique is that it helps individual panel members in assessing their forecasts. However Delphi method is quite expensive. Often, the most knowledgeable experts in the industry will command more fees. Besides, those who consider themselves as experts may be reluctant to be influenced by the opinions of others on the panel.
If the number of experts is large and their predictions are different then a simple average or weighted average is found so as to lead to unique forecasts. This method of forecasting is called the Hunch method.
The main advantage of the Experts Opinion Survey Method is its simplicity. It does not require extensive statistical or mathematical calculations However this method has its own limitations. It is purely subjective. It substitutes opinion in place of analysis of the situation. Experts may have different forecasts or any one among them may influence others. Who knows experts may be biased or have their own intentions behind providing their opinions. If the consulted experts are genuinely reliable then panel consensus could be perhaps the best method of forecasting.