CDPP Demand Planning Metrics & Performance Management 2

Question 1

What is a demand planning KPI dashboard primarily used for?

Accepted Answer

Monitoring forecast accuracy, bias, and process health to drive continuous improvement decisions

Answer

A KPI dashboard gives demand planners and leadership visibility into forecast performance trends, enabling data-driven decisions about model adjustments and process improvements.

Question 2

What does 'forecast value add' (FVA) analysis measure?

Accepted Answer

Whether each step in the forecasting process improves or worsens accuracy compared to a naive benchmark

Answer

FVA evaluates each forecasting stage—statistical baseline, market intelligence adjustments, management overrides—to identify which steps genuinely improve accuracy and which add noise.

Question 3

In FVA analysis, what does a negative FVA for management overrides indicate?

Accepted Answer

Management adjustments, on average, make the forecast less accurate than the statistical baseline

Answer

Negative FVA means the adjusted forecast has higher error than the unadjusted statistical model, indicating that management overrides are introducing more noise than signal.

Question 4

What is the relationship between forecast accuracy and inventory carrying costs?

Accepted Answer

Improved forecast accuracy reduces the safety stock needed to achieve a target service level, lowering carrying costs

Answer

Safety stock is sized to buffer forecast uncertainty, so reducing forecast error (lower standard deviation of errors) directly decreases the safety stock required for any given service level.

Question 5

What is 'service level' as a demand planning performance metric?

Accepted Answer

The percentage of customer orders filled completely from available stock (fill rate or cycle service level)

Answer

Service level in supply chain context typically refers to fill rate (percentage of demand met from stock) or cycle service level (percentage of replenishment cycles with no stockout).

CDPP - Certified Demand Planning Professional Practice Test

CDPP - Certified Demand Planning Professional Practice Test

CDPP Demand Planning Metrics & Performance Management 2