APICS Demand Management 3 — Questions and Answers
Question 1: Which type of forecasting relies on the opinions of executives, sales staff, or customers rather than historical data?
- Time series analysis
- Causal forecasting
- Qualitative forecasting (Correct answer)
- Simulation modeling
Correct answer: Qualitative forecasting
Qualitative forecasting methods, such as the Delphi method or market research, use human judgment and expert opinion when historical data is unavailable or insufficient.
Question 2: A demand planner notices that sales of sunscreen spike every summer. This is an example of which demand pattern?
- Trend
- Cyclical
- Seasonal (Correct answer)
- Random
Correct answer: Seasonal
Seasonality refers to predictable, repeating demand fluctuations tied to the time of year or calendar events.
Question 3: What does Mean Absolute Deviation (MAD) measure in demand forecasting?
- The percentage error relative to actual demand
- The average of absolute differences between forecasted and actual demand (Correct answer)
- The correlation between two demand series
- The standard deviation of forecast errors squared
Correct answer: The average of absolute differences between forecasted and actual demand
MAD averages the absolute values of forecast errors, providing a straightforward measure of forecast accuracy in the same units as demand.
Question 4: In which scenario would a company most likely use a 'make-to-stock' demand fulfillment strategy?
- Custom-engineered products with long lead times
- Standard consumer goods with short customer tolerance times (Correct answer)
- Engineer-to-order aerospace components
- High-value capital equipment with unique specifications
Correct answer: Standard consumer goods with short customer tolerance times
Make-to-stock is used when products are standardized and customers expect immediate availability, so goods are produced in anticipation of demand.
Question 5: Which term describes the practice of withholding customer orders to ship in a subsequent period to meet a sales quota?
- Channel stuffing (Correct answer)
- Order batching
- Demand sensing
- Forward buying
Correct answer: Channel stuffing
Channel stuffing involves artificially inflating sales by pushing excess product to distributors or retailers, distorting true demand signals.
Question 6: What is the role of 'point of sale (POS) data' in demand management?
- It tracks supplier lead times and delivery performance
- It provides real-time actual consumer purchase data to improve forecast accuracy (Correct answer)
- It calculates economic order quantities for replenishment
- It determines safety stock levels based on service targets
Correct answer: It provides real-time actual consumer purchase data to improve forecast accuracy
POS data captures actual end-consumer purchases, enabling demand planners to build forecasts from real consumption rather than distributor orders.
Question 7: Which demand management concept involves classifying products by their demand variability and volume to determine appropriate planning approaches?
- ABC analysis
- XYZ analysis (Correct answer)
- Pareto classification
- Safety stock tiering
Correct answer: XYZ analysis
XYZ analysis categorizes items by demand variability (X=stable, Y=variable, Z=highly irregular) to tailor forecasting and replenishment strategies.
APICS Demand Management 3
Which type of forecasting relies on the opinions of executives, sales staff, or customers rather than historical data?