Certified Supply Chain Professional (CSCP) Practice Exam

What type of analysis is involved in demand forecasting?

1. Qualitative only

2. Quantitative only

3. A combination of qualitative and quantitative

4. Neither qualitative nor quantitative

The correct answer is: A combination of qualitative and quantitative

Demand forecasting is a critical process in supply chain management that involves predicting future customer demand for products. This process typically utilizes both qualitative and quantitative analysis methods. Qualitative analysis involves subjective assessments and is particularly useful when there is limited historical data available. This method draws on expert opinions, market research, and insights on trends, customer behavior, and preferences. Such insights can help capture nuances that numbers alone might miss. On the other hand, quantitative analysis relies on numerical data and statistical methods to identify patterns and trends from historical demand data. Techniques such as time-series analysis, causal models, and regression analysis fall under this category. These methods can provide a more precise and data-driven outlook based on past sales and other measurable factors. By combining both qualitative and quantitative approaches, demand forecasting can be more robust and accurate, accommodating varying data availability and the complexities of consumer behavior. This hybrid approach allows forecasters to account for statistical trends while also incorporating human insights, making it a best practice in effective supply chain management.