Certified Supply Chain Professional (CSCP) Practice Exam

What does naive forecasting predict?

1. Future demand based on advanced algorithms

2. Future demand will replicate last period's demand

3. Future demand is unrelated to past trends

4. Future demand derived from expert opinions

The correct answer is: Future demand will replicate last period's demand

Naive forecasting is a basic and straightforward approach that predicts future demand by using the last observed value as the basis for the prediction. This means that it assumes future demand will replicate last period's demand. This method is often employed in scenarios where there are few resources for analysis or data may not be reliable, making it a practical, albeit simplistic, option for short-term forecasting in various supply chain contexts. The other options describe different methodologies. Advanced algorithms indicate a more complex analytical approach that considers various factors and patterns in the data. Predicting demand as unrelated to past trends reflects a viewpoint that does not utilize historical data, which is contrary to the very nature of naive forecasting. Lastly, deriving future demand from expert opinions suggests a qualitative approach rather than a quantitative one, which again differs from the naive strategy that relies solely on the most recent data point.