Keyword Analysis & Research: what is forecast bias in supply chain

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Frequently Asked Questions

What is bias in forecasting?

It is an average of non-absolute values of forecast errors. If it is negative, a company tends to over-forecast; if positive, it tends to under-forecast. In the machine learning context, bias is how a forecast deviates from actuals. In new product forecasting, companies tend to over-forecast.

How to prevent biases in supply chain planning?

A better course of action is to measure and then correct for the bias routinely. This is irrespective of which formula one decides to use. Good supply chain planners are very aware of these biases and use techniques such as triangulation to prevent them.

What is supply chain forecasting?

As its name implies, supply chain forecasting is based largely on analyzing supply. But demand also plays into it—factors such as seasons, supply chain trends, the economy, and global events can all lead to spikes or sluggish sales, which can affect inventory control. Why is supply chain forecasting important?

Is forecast bias a major impediment standing in the way?

In summary, it is appropriate for organizations to look at forecast bias as a major impediment standing in the way of improving their supply chains because any bias in the forecast means that they are either holding too much inventory (over-forecast bias) or missing sales due to service issues (under-forecast bias). Most organizations have a mix...

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