Certified Supply Chain Professional (CSCP) Practice Exam

Which term refers to the systematic error in forecasts where results consistently lean towards a particular direction?

1. Fluctuation

2. Bias

3. Variance

4. Deviation

The correct answer is: Bias

The term that identifies the systematic error in forecasts, where results consistently lean towards a certain direction, is bias. In the context of forecasting, bias reflects the consistent tendency of predictions to be either overestimated or underestimated compared to actual outcomes. This phenomenon is crucial to recognize because it can indicate a flaw in the forecasting method or model being used, leading to incorrect strategic decisions if not addressed. Fluctuation refers to changes or variations in data which can occur randomly and do not imply a consistent directional error. Variance measures the degree of spread in a set of data points around the mean and does not specifically highlight a consistent directional bias. Deviation generally indicates the difference between predicted and actual values but lacks the systematic aspect necessary to describe bias. Bias, therefore, is the most appropriate term to describe this consistent misalignment in forecasts.