A _________ forecast error indicates the forecasting method underestimated the actual value.

A positive forecast error indicates that the forecasting method underestimated the actual value. In forecasting, the error is calculated as the difference between the actual value and the forecasted value. When the actual value is higher than the forecasted value, the resulting error will be a positive number. This signifies that the forecast did not account for the full extent of the actual demand or outcome, leading to an underestimation.

In contrast, a negative forecast error would mean that the forecast overestimated the actual value. Neutral errors would indicate that the forecast was exactly correct, and significant errors typically refer to the magnitude of the discrepancy without specifying direction. Understanding how forecast errors relate to actual outcomes is crucial for effectively managing supply chains and operations, as accurate forecasting directly influences inventory management, production planning, and overall operational efficiency.