FREE CSCP MCQ Questions and Answers Flashcards

Which forecasting error measure averages the absolute differences between actual and forecast demand?

Answer: Mean absolute deviation (MAD)

MAD is the average of the absolute values of forecast errors, ignoring direction.

A tracking signal consistently exceeds its upper control limit. What does this MOST likely indicate?

Answer: The forecast is biased and consistently under-forecasting

A tracking signal is cumulative error divided by MAD, so a large positive value shows actual demand persistently exceeds the forecast.

In ABC classification, which items typically represent about 20% of SKUs but roughly 80% of annual dollar usage?

Answer: A items

ABC analysis applies the Pareto principle, with A items receiving the tightest control.

Which type of inventory is held to protect against uncertainty in demand or supply?

Answer: Safety stock

Safety stock buffers against variability in demand and lead time.

What does the economic order quantity (EOQ) model seek to minimize?

Answer: The sum of ordering costs and carrying costs

EOQ finds the order quantity where total annual ordering and holding costs are lowest.

A company designs products with common modules and finishes them only after receiving customer orders. What strategy is this?

Answer: Postponement

Postponement delays final differentiation until demand is known, reducing finished goods risk.

Which demand type is calculated from the requirements of higher-level items rather than forecast?

Answer: Dependent demand

Dependent demand for components is derived from the master production schedule via the bill of material.