A __________ forecast error indicates the forecasting method overestimated the actual value.

A negative forecast error occurs when the forecasted value is greater than the actual value. In this context, it means that the method used to predict demand or performance overestimated the actual outcome. For example, if a company forecasted sales of 1000 units but the actual sales were only 800 units, the forecast error would be calculated as 800 - 1000, resulting in a negative value of -200. This signal indicates that the forecasting method was too optimistic, leading to potential issues in inventory management, resource allocation, and overall supply chain efficiency.

Positive forecast errors, on the other hand, signify that the forecast was an underestimate, while terms like critical and large do not specifically define the nature of the forecast error in relation to over or underestimating values. Focusing on the numeric outcome of the forecast error helps in accurately assessing and improving forecasting methods.