Forecasts are more accurate the farther out into the future that you forecast.

• A. True
• B. False
• C. Depends on method
• D. Uncertain

Answer: (B)

Forecast accuracy generally declines as you look further into the future. Short-term forecasts stay tightly tied to the most recent data and repeating patterns like seasonality, so they can track actual demand more closely. As the horizon extends, more unknowns come into play—changes in demand drivers, economic shifts, promotions, supply disruptions, and other events—making predictions increasingly uncertain. Small errors from earlier steps can compound over time, widening the gap between forecasted and actual outcomes.

In supply chain practice, this is why we rely on rolling forecasts, frequent updates, and uncertainty-based planning (scenarios, ranges, safety stock) rather than trusting a single long-range forecast. While some long-term insights can be gained with specialized methods, the general rule is that accuracy tends to fall as the forecast horizon lengthens.