Demand Management Flashcards

Which technique smooths out random demand variation by averaging demand over several periods?

Answer: Moving average

Moving average calculates the mean demand over a fixed number of prior periods to dampen random fluctuations.

In demand management, what is 'demand shaping'?

Answer: Using pricing, promotions, or incentives to influence customer demand

Demand shaping involves actively influencing customer demand through pricing, promotions, or product offerings to better align demand with supply capacity.

What is the primary purpose of a sales and operations planning (S&OP) process?

Answer: To balance supply capabilities with demand requirements across the enterprise

S&OP aligns supply and demand plans across functions to create one integrated business plan.

Which demand pattern is characterized by a consistent upward or downward movement in demand over time?

Answer: Trend

A trend reflects a long-term directional movement in demand, either increasing or decreasing over time.

A company uses a tracking signal to monitor forecast accuracy. What does a tracking signal exceeding control limits indicate?

Answer: A systematic bias exists in the forecasting model

A tracking signal outside control limits signals that cumulative forecast error is biased in one direction, indicating the model needs revision.

Which of the following best describes 'dependent demand'?

Answer: Demand derived from the production of a parent item

Dependent demand is calculated from the demand for higher-level items in the bill of materials rather than forecasted independently.

What is 'collaborative planning, forecasting, and replenishment' (CPFR) designed to do?

Answer: Enable trading partners to jointly develop demand forecasts and replenishment plans

CPFR is a business practice where supply chain partners share information and jointly manage forecasting and replenishment to reduce variability.