Certified Supply Chain Professional (CSCP) Practice Exam

Which of the following statements regarding good forecasting is incorrect?

1. It requires a mix of different approaches

2. It is solely based on previous sales data

3. It should consider market trends

4. It may include qualitative insights

The correct answer is: It is solely based on previous sales data

The statement that good forecasting is solely based on previous sales data is incorrect because effective forecasting requires a comprehensive approach that incorporates a variety of data sources and methodologies. Relying exclusively on historical sales data limits the ability to capture broader market dynamics, changes in consumer behavior, and external influences such as economic shifts, seasonal trends, and competitive actions. A robust forecasting process should not only analyze past sales but also integrate qualitative insights, market trends, and other relevant factors that could affect future demand. By leveraging a mix of quantitative methods, such as statistical analysis of sales patterns, and qualitative insights from market research, businesses can create more accurate and reliable forecasts. This well-rounded approach enhances decision-making processes and aligns operations with anticipated market needs.