APICS Demand Management 2 — Questions and Answers
Question 1: Which technique smooths out random demand variation by averaging demand over several periods?
- Exponential smoothing
- Moving average (Correct answer)
- Trend analysis
- Seasonal indexing
Correct answer: Moving average
Moving average calculates the mean demand over a fixed number of prior periods to dampen random fluctuations.
Question 2: In demand management, what is 'demand shaping'?
- Forecasting future demand using historical data
- Using pricing, promotions, or incentives to influence customer demand (Correct answer)
- Segmenting customers by purchase frequency
- Allocating supply to highest-priority customers
Correct 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.
Question 3: What is the primary purpose of a sales and operations planning (S&OP) process?
- To set individual salesperson quotas
- To balance supply capabilities with demand requirements across the enterprise (Correct answer)
- To negotiate contracts with key suppliers
- To determine safety stock levels for all SKUs
Correct 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.
Question 4: Which demand pattern is characterized by a consistent upward or downward movement in demand over time?
- Seasonality
- Cyclical variation
- Trend (Correct answer)
- Random variation
Correct answer: Trend
A trend reflects a long-term directional movement in demand, either increasing or decreasing over time.
Question 5: A company uses a tracking signal to monitor forecast accuracy. What does a tracking signal exceeding control limits indicate?
- The forecast is performing within acceptable bounds
- A systematic bias exists in the forecasting model (Correct answer)
- Demand has entered a seasonal period
- Safety stock should be reduced
Correct 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.
Question 6: Which of the following best describes 'dependent demand'?
- Demand driven directly by customer orders
- Demand derived from the production of a parent item (Correct answer)
- Demand influenced by competitor pricing
- Demand that must be forecasted using statistical methods
Correct 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.
Question 7: What is 'collaborative planning, forecasting, and replenishment' (CPFR) designed to do?
- Replace traditional MRP with advanced planning systems
- Enable trading partners to jointly develop demand forecasts and replenishment plans (Correct answer)
- Automate purchase order generation based on reorder points
- Standardize EDI messaging formats between suppliers and retailers
Correct 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.
APICS Demand Management 2
Which technique smooths out random demand variation by averaging demand over several periods?