One type of demand fluctuation is caused by random variation.What is random variation?
A) errors in inventory management
B) errors not caught by using exponential smoothing
C) demand that cannot normally be anticipated
D) failure to properly execute the SO&P process plan

Question

Quizplus · Accepted Answer

Random variation refers to changes in demand that cannot be attributed to any specific factors or known causes. These changes are typically unpredictable and random in nature, making it difficult to anticipate or plan for them. Factors such as seasonality, market trends, and consumer behavior can all contribute to random variation in demand. Unlike errors in inventory management or execution of the SO&P process plan, which can often be traced back to specific causes, random variation is simply an inherent part of the demand forecasting process.

One Type of Demand Fluctuation Is Caused by Random Variation