Accurate forecasting is a critical success factor for all functions within a company, including the supply chain network. However, forecasting is not a perfect science and mistakes will happen. The key is to assess your forecasting practices often and adjust as needed. In this activity, you explore the consequences and costs of forecasting errors.
For this assignment, compose your response to the following questions:
- Identify a business example where large demand forecasting errors would be extremely costly. What are the implications for the supply chain?
- Which forecast error metric would be best to use for this environment?