Certified Supply Chain Professional (CSCP) Practice Exam

What does a continuously positive tracking signal indicate?

1. Over-forecasting

2. Consistent accuracy

3. Under-forecasting

4. No forecasting bias

The correct answer is: Under-forecasting

A continuously positive tracking signal indicates that there is an ongoing pattern of under-forecasting in the projections being made. The tracking signal is a measure used to evaluate the accuracy of a forecasting model by comparing the cumulative forecast errors to a predetermined acceptable range. When this signal is positive, it means that the actual results are consistently higher than what was forecasted, leading to a situation where forecasts are systematically lower than the actual demand. In a practical scenario, under-forecasting can lead to stockouts and inability to meet customer demand, as the forecasts do not adequately prepare for the actual volume of product needed. Recognizing a continuously positive tracking signal allows organizations to adjust their forecasting methods to better align with reality and avoid complications arising from unmet demand. The other options do not accurately reflect what a continuously positive tracking signal indicates. For instance, over-forecasting would imply a negative tracking signal, while consistent accuracy would suggest that the tracking signal remains close to zero, indicating that forecasts are nearly matching actual results. Similarly, no forecasting bias would imply balanced forecasting, which contradicts the notion of a continuously positive tracking signal.