Certified Supply Chain Professional (CSCP) Practice Exam

What does a positive forecast indicate regarding demand?

1. Demand is less than forecast

2. Demand is greater than forecast

3. Forecast is adequately met

4. No relationship with actual demand

The correct answer is: Demand is greater than forecast

A positive forecast indicates that demand is expected to be greater than what was previously anticipated or that there is an upward trend in expected demand. This means that the assessment of future customer requirements suggests a strengthening interest in the product or service, which necessitates a proactive approach in supply chain management to ensure that resources are available to meet this increased demand. An accurate forecasting system would typically reflect such optimistic projections based on available data, market trends, and economic indicators, enabling businesses to make informed decisions regarding inventory levels, production schedules, and resource allocation. The other options reflect misunderstandings of what a positive forecast signifies. For instance, stating that demand is less than forecast directly contradicts the notion of a positive forecast, as it suggests a situation where actual requirements fall short. Additionally, saying that the forecast is adequately met implies that demand is perfectly aligned with expectations, without a clear indication of growth or increase. Lastly, claiming no relationship with actual demand disregards the fundamental purpose of forecasting, which is to anticipate future demand based on historical data and trends.