Certified Supply Chain Professional (CSCP) Practice Exam

What does time series forecasting primarily depend on?

1. Expertise in qualitative assessments

2. Historical data trends over time

3. Future market predictions

4. Surveys and consumer opinion on products

The correct answer is: Historical data trends over time

Time series forecasting primarily relies on historical data trends over time. This method analyzes past data points collected at consistent intervals to identify patterns and predict future values. The strength of time series forecasting lies in its ability to discern behaviors in data such as seasonality, cycles, and trends, which can indicate how certain variables change over time. Historical data provides the foundation for these predictions, allowing analysts to extrapolate future occurrences based on established patterns. While qualitative assessments, market predictions, and consumer surveys may inform broader forecasting methods, they do not specifically focus on the systematic collection and analysis of historical time-stamped data that is fundamental to time series forecasting. Consequently, the effectiveness of this approach is largely driven by the availability and accuracy of historical data.