Which of the following challenges is related to demand variability?

Demand variability refers to the fluctuations in customer demand over time, which can create challenges in supply chain management. Inaccurate forecasting is directly linked to this issue, as it raises the potential for supply chain disruptions. When forecasts are not accurate, it can lead to either overproduction or underproduction. This, in turn, results in excess inventory costs or stockouts, both of which can severely affect a company's ability to meet customer needs effectively.

Accurate demand forecasting is critical for effective inventory management and production planning. If forecasts underestimate demand, it may create a situation where the supply cannot keep up, leading to missed sales opportunities and dissatisfied customers. Conversely, if forecasts overestimate demand, companies may end up with surplus inventory, leading to increased holding costs and wasted resources.

Understanding this relationship emphasizes the need for companies to invest in more sophisticated forecasting techniques and real-time data analysis to minimize the impact of demand variability on their operations and improve overall supply chain efficiency.