One type of demand fluctuation is caused by random variation. What is random variation?
A) Errors in inventory management
B) Errors not caught by using exponential smoothing
C) A development that cannot normally be anticipated
D) Failure to properly execute the SO&P process plan

Question

Quizplus · Accepted Answer

Random variation refers to fluctuations in demand that cannot be explained or anticipated by typical forecasting methods. These fluctuations occur due to unforeseen events or changes in consumer behavior that are out of the company's control. Examples of random variation include natural disasters, unexpected shifts in market trends or consumer preferences, and changes in economic conditions.

One Type of Demand Fluctuation Is Caused by Random Variation