APICS Demand Management 5

Question 1

Which forecasting method is most appropriate when demand is driven by an underlying causal variable such as housing starts or GDP?

Accepted Answer

Regression analysis

Answer

Regression analysis models the relationship between demand and one or more independent causal variables to produce a cause-and-effect forecast.

Question 2

A planner calculates a seasonal index of 1.25 for Q4. What does this indicate?

Accepted Answer

Q4 demand is 25% above the annual average

Answer

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.

Question 3

Which term describes the maximum amount of product a market can absorb within a given period, regardless of price or marketing effort?

Accepted Answer

Market potential

Answer

Market potential represents the upper limit of demand for a product in a defined market over a specific time period under ideal conditions.

Question 4

In a make-to-order environment, which input is most critical for driving the master production schedule?

Accepted Answer

Firm customer orders

Answer

In make-to-order environments, firm customer orders (not forecasts) are the primary demand signal because production begins only after an order is received.

Question 5

What is the primary risk of using only qualitative forecasting methods for high-volume commodity products?

Accepted Answer

They introduce subjective bias and are difficult to validate statistically

Answer

Qualitative methods rely on human judgment, which can introduce personal biases and lack the statistical rigor needed for reliable high-volume product forecasting.

(APICS) American Production and Inventory Control Society Certified Practice Test

(APICS) American Production and Inventory Control Society Certified Practice Test

APICS Demand Management 5