FREE Certified Supply Chain Professional (CSCP) Demand Management and Forecasting Questions and Answers Flashcards

A product's running sum of forecast errors (RSFE) is 60 units and its mean absolute deviation (MAD) is 15 units. What is the tracking signal?

Answer: 4

Tracking signal = RSFE / MAD = 60 / 15 = 4.

Last period's forecast was 100 units, actual demand was 120 units, and the smoothing constant (alpha) is 0.2. What is the new exponentially smoothed forecast?

Answer: 104

New forecast = 100 + 0.2 × (120 − 100) = 104.

Average monthly demand across the year is 500 units, and July demand averages 650 units. What is July's seasonal index?

Answer: 1.30

Seasonal index = period average / overall average = 650 / 500 = 1.30.

A company is launching a completely new product category with no sales history. Which forecasting technique is most appropriate?

Answer: Delphi method using expert panels

Qualitative methods such as Delphi are used when no historical data exists for quantitative models.

A forecast that is consistently higher than actual demand will most likely result in which outcome?

Answer: Excess inventory and carrying costs

Persistent over-forecasting is a bias that drives excess production and inventory.

Which of the following items should normally be forecast rather than calculated?

Answer: Finished goods sold to external customers

Independent demand items like finished goods are forecast, while dependent demand items are calculated from the MPS via MRP.

What is the effect of increasing the smoothing constant (alpha) in exponential smoothing?

Answer: The forecast responds more quickly to recent demand changes

A higher alpha places more weight on recent demand, making the forecast more responsive but less smooth.