Demand Management Flashcards
7 cards from real APICS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Demand Management flashcards as text
Which forecasting method is most appropriate when demand is driven by an underlying causal variable such as housing starts or GDP?
Answer: Regression analysis
Regression analysis models the relationship between demand and one or more independent causal variables to produce a cause-and-effect forecast.
A planner calculates a seasonal index of 1.25 for Q4. What does this indicate?
Answer: Q4 demand is 25% above the annual average
A seasonal index greater than 1.0 indicates demand in that period is higher than average; 1.25 means Q4 demand is 25% above the annual average.
Which term describes the maximum amount of product a market can absorb within a given period, regardless of price or marketing effort?
Answer: Market potential
Market potential represents the upper limit of demand for a product in a defined market over a specific time period under ideal conditions.
In a make-to-order environment, which input is most critical for driving the master production schedule?
Answer: Firm customer orders
In make-to-order environments, firm customer orders (not forecasts) are the primary demand signal because production begins only after an order is received.
What is the primary risk of using only qualitative forecasting methods for high-volume commodity products?
Answer: They introduce subjective bias and are difficult to validate statistically
Qualitative methods rely on human judgment, which can introduce personal biases and lack the statistical rigor needed for reliable high-volume product forecasting.
Which planning horizon is typically associated with the demand management process in S&OP?
Answer: 3–18 months (tactical planning)
S&OP and demand management typically operate over a 3–18 month tactical horizon, balancing medium-term demand projections with supply capacity decisions.
A company observes that its distributor's orders fluctuate far more than end-consumer sales. This phenomenon is known as:
Answer: The bullwhip effect
The bullwhip effect describes how small fluctuations in consumer demand get amplified as orders move upstream through the supply chain.