Certified Supply Chain Professional (CSCP) Practice Exam

Which condition suggests the need for a review of the forecasting method?

1. Consistency in tracking signals

2. Tracking signal within -4 to +4

3. Tracking signal continuously negative

4. Tracking signal outside of -4 to +4

The correct answer is: Tracking signal outside of -4 to +4

The condition indicating a need for a review of the forecasting method is when the tracking signal falls outside the range of -4 to +4. The tracking signal is a measure that helps determine how accurate a forecasting method has been. When the tracking signal is within this range, it suggests that the forecasting method is performing adequately. However, when it is outside this range, it implies that the forecasts may be consistently overestimating or underestimating actual demand. This consistent deviation could result from various factors, including changes in market conditions, shifts in customer preferences, or other environmental factors. Therefore, a tracking signal that lies outside of -4 to +4 indicates a significant discrepancy between the forecast and actual performance, prompting a review to assess the forecasting model's effectiveness and make necessary adjustments. Options that suggest consistency in tracking signals or tracking signals being within a specific range (like -4 to +4) do not reflect a need for review, as these suggest that the forecasting remains stable and accurate. Continuous negative signals, while concerning, can still fall within an acceptable range under certain circumstances; however, a signal outside the set thresholds definitively requires a reevaluation of the method.