CDPP Statistical Analysis for Demand Planning — Questions and Answers
Question 1: What is seasonality in demand patterns?
- Predictable, recurring fluctuations in demand associated with specific time periods within a year (Correct answer)
- Random demand variation with no pattern
- A decrease in demand during winter only
- Demand that only occurs during holiday seasons
Correct answer: Predictable, recurring fluctuations in demand associated with specific time periods within a year
Seasonality refers to regular, predictable patterns of demand variation that repeat over consistent time periods (weekly, monthly, quarterly, annually), such as holiday shopping or summer ice cream sales.
Question 2: What is trend analysis in demand forecasting?
- Identifying the long-term directional movement of demand over time, whether increasing, decreasing, or flat (Correct answer)
- A fashion industry analysis of clothing trends
- A social media trending topics analysis
- A stock market technical analysis method
Correct answer: Identifying the long-term directional movement of demand over time, whether increasing, decreasing, or flat
Trend analysis identifies the long-term directional movement in demand data, distinguishing between upward growth trends, downward declining trends, and flat/stable patterns.
Question 3: What is regression analysis and how is it used in demand planning?
- A statistical method that models the relationship between demand and one or more explanatory variables (Correct answer)
- A psychological assessment of emotional regression
- A method for returning defective products to suppliers
- A backward-looking historical analysis only
Correct answer: A statistical method that models the relationship between demand and one or more explanatory variables
Regression analysis models how demand (dependent variable) is influenced by factors like price, advertising spend, economic indicators, and competitive activity (independent variables).
Question 4: What is the coefficient of determination (R²) and why does it matter?
- A measure of how well a regression model explains the variation in the data, ranging from 0 to 1 (Correct answer)
- A coefficient for determining shipping routes
- A ranking of determination levels among planning staff
- A measurement of demand determinism in economic theory
Correct answer: A measure of how well a regression model explains the variation in the data, ranging from 0 to 1
R² indicates the proportion of variance in the dependent variable explained by the model. An R² of 0.85 means the model explains 85% of the variation in demand.
Question 5: What is the difference between correlation and causation in demand analysis?
- Correlation shows two variables move together; causation proves one actually causes the other (Correct answer)
- They are identical concepts
- Correlation is always stronger than causation
- Causation can exist without any correlation
Correct answer: Correlation shows two variables move together; causation proves one actually causes the other
Two variables may be correlated (move together) without one causing the other. Ice cream sales and drownings both increase in summer, but one doesn't cause the other — heat causes both.
Question 6: What is a confidence interval in demand forecasting?
- A range around the forecast indicating the probability that actual demand will fall within that range (Correct answer)
- A measure of the forecaster's personal confidence level
- The interval between successive forecasting meetings
- A mandatory waiting period before accepting a forecast
Correct answer: A range around the forecast indicating the probability that actual demand will fall within that range
A confidence interval provides a range (e.g., 95% CI: 900-1,100 units) expressing the probability that actual demand will fall within that range, quantifying forecast uncertainty.
CDPP Statistical Analysis for Demand Planning
What is seasonality in demand patterns?