Forecasting errors are dealt with using
A) safety backlog.
B) safety capacity.
C) safety inventory.
D) all of the above
E) B and C only

Question

Quizplus · Accepted Answer

Forecasting errors are typically addressed by holding safety inventory, which is maintained to cover variability in delivery times and demand. The safety inventory may be planned by management to address known sources of variability or may be ongoing to address inherent uncertainty in demand and supply even when everything is seemingly going according to plan. Safety capacity may also be held to provide more flexibility for handling variability in demand or supply. Safety backlog involves the creation of additional production or service capacity, which could be unnecessary and also inconvenient during periods when demand is low. Therefore, safety inventory and safety capacity are the preferred options for dealing with forecasting errors.

Forecasting Errors Are Dealt with Using