Ace the CSCMP Challenge 2025 – Supercharge Your Supply Chain Skills!

Demand forecast bias refers specifically to the discrepancy between the forecasted values and the actual sales figures over a specific period. When we assess a forecast for its bias, we are essentially examining whether the forecasts consistently overestimate or underestimate demand. This is critical for businesses as it helps them understand the reliability of their demand forecasting processes and adjust their strategies accordingly.

Recognizing a bias allows companies to identify systematic errors in their forecasting methods. For example, if a company consistently overestimates demand, it may lead to excess inventory and increased holding costs. Conversely, consistent underestimations can result in stockouts and lost sales opportunities. Evaluating demand forecast bias is an essential step in refining forecasting techniques and improving overall supply chain efficiency.

In contrast, while some of the other options address aspects of demand forecasting, they do not specifically define what bias signifies. For instance, accuracy of inventory predictions is more about how well inventory levels align with actual demand rather than the extent of forecast errors. Similarly, average sales trends or total demand for a given period do not capture the concept of forecasting discrepancies that bias specifically denotes.