Certified Supply Chain Professional (CSCP) Practice Exam

What statistical concept is used to determine how demand fluctuates around a mean?

1. Standard error

2. Bell curve and standard deviations

3. Normal distribution only

4. Predictive analytics

The correct answer is: Bell curve and standard deviations

The concept of using a bell curve and standard deviations is essential in understanding how demand fluctuates around a mean. The bell curve represents a normal distribution, which illustrates how data points are distributed around an average value. In a normal distribution, most data points cluster around the mean, with fewer points appearing as you move away from the mean. Standard deviations provide a way to quantify the amount of variation or dispersion in a set of data values. By measuring how far individual data points deviate from the mean, you can assess the volatility of demand. A smaller standard deviation indicates that demand is more consistent and closer to the mean, while a larger standard deviation suggests greater variability, meaning demand can be more unpredictable. This understanding is crucial for supply chain professionals as it enables them to make informed decisions regarding inventory management, forecasting, and capacity planning based on the behavior of demand over time.