What does "forecast accuracy" measure?

Forecast accuracy measures how closely a forecast aligns with actual demand figures, which is critical for effective inventory management and production planning. Accurate forecasts enable companies to anticipate customer demand more effectively, helping to minimize stockouts and overstock situations. This alignment can lead to better resource allocation, improved customer satisfaction, and optimized operational efficiency.

In contrast, the other options focus on different aspects of supply chain and operations management. The speed of product manufacturing is related to production efficiency but does not directly measure the accuracy of demand predictions. The cost-effectiveness of the supply chain evaluates how well resources are utilized in terms of financial efficiency rather than the precision of demand forecasts. Lastly, the efficiency of the inventory storage process pertains to how well inventory is managed and organized, but it does not provide insight into how accurately future demand has been predicted. Therefore, option C is the most relevant and accurate interpretation of forecast accuracy.