In forecasting, what is a primary criterion to assess forecast performance?

Forecast accuracy is a critical criterion for assessing forecast performance because it measures how close predicted values are to actual outcomes. In supply chain and operations management, making accurate forecasts is essential for effective inventory management, production planning, and meeting customer demand. High forecast accuracy indicates that a company can make informed decisions, minimize excess inventory, reduce stockouts, and achieve better overall efficiency.

Moreover, accurate forecasting directly impacts the bottom line, as it enhances the ability to align supply and demand effectively. When a forecast accurately predicts future sales, it allows organizations to allocate resources efficiently, optimize supply chain operations, and maintain customer satisfaction. This focus on accuracy enables businesses to adapt quickly to changes in the market and respond appropriately to customer needs.