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

Which statement reflects a basic principle of forecasting?

Answer: Forecasts for aggregated product groups are generally more accurate than for individual items

Aggregation lets random errors offset, so family-level forecasts are more accurate than item-level ones.

What is the primary objective of sales and operations planning (S&OP)?

Answer: Balancing aggregate demand and supply and aligning them with the financial plan

S&OP is a cross-functional process that balances demand and supply at the aggregate level and ties operations to business and financial plans.

A product's tracking signal has moved to +5.2 when the control limits are ±4. What does this most likely indicate?

Answer: The forecast is biased and the model should be reviewed

A tracking signal outside its limits signals persistent bias, meaning the forecast method needs review.

Using weights of 0.5, 0.3, and 0.2 (most recent first) and demand of 100, 80, and 60 units (most recent first), what is the weighted moving average forecast?

Answer: 86

0.5 × 100 + 0.3 × 80 + 0.2 × 60 = 50 + 24 + 12 = 86.

What best describes demand sensing?

Answer: Using near-real-time downstream data such as POS and orders to refine short-term forecasts

Demand sensing uses current downstream signals to improve very short-horizon forecast accuracy.

A lumber distributor forecasts demand using housing starts as a leading indicator. Which forecasting approach is this?

Answer: Causal (associative) forecasting

Causal methods such as regression relate demand to external variables like housing starts.

What does mean absolute deviation (MAD) measure in forecasting?

Answer: The average magnitude of forecast errors regardless of direction

MAD averages absolute errors, measuring error size without regard to sign.