Navigating Uncertainty: Human vs. Algorithmic Forecasting Approaches in Times of Crisis

Forecasting plays a pivotal role in effective operational management, providing critical insights for decisiForecasting plays a pivotal role in effective operational management, providing critical insights for decision-makers. This study investigates the impact a crisis has on short-term forecasting performance, comparing human and algorithmic approaches. Drawing on data from a Swiss automotive distributor, the research distinguishes between four crisis types, where we focus on external sudden and external smoldering crises. Employing a mixed-method sequential explanatory research design, we find that algorithmic forecasts outperform human forecasts. Furthermore, variations in forecasting accuracy are observed across the different crisis situations. We find that independent of the specific business situation, overall, algorithmic forecasts outperform human forecasts. This study contributes valuable insights into the effectiveness of different forecasting methods in diverse crises, enhancing decision-making knowledge and resilience in times of uncertainty.on-makers. This study investigates the impact a crisis has on short-term forecasting performance, comparing human and algorithmic approaches. Drawing on data from a Swiss automotive distributor, the research distinguishes between four crisis types, where we focus on external sudden and external smoldering crises. Employing a mixed-method sequential explanatory research design, we find that algorithmic forecasts outperform human forecasts. Furthermore, variations in forecasting accuracy are observed across the different crisis situations. We find that independent of the specific business situation, overall, algorithmic forecasts outperform human forecasts. This study contributes valuable insights into the effectiveness of different forecasting methods in diverse crises, enhancing decision-making knowledge and resilience in times of uncertainty.