A negative forecast error is better than a positive forecast error.

Question

Quizplus · Accepted Answer

Both positive and negative forecast errors indicate that the actual outcome was different from the predicted outcome. However, a positive forecast error means that the forecast was too low and therefore resulted in a missed opportunity or loss of revenue, while a negative forecast error means that the forecast was too high and resulted in excess inventory or resources, which can be addressed through cost-cutting measures. Therefore, a negative forecast error is not necessarily better than a positive forecast error, as it depends on the specific situation and the impact of the error on the business.

A Negative Forecast Error Is Better Than a Positive Forecast