CSCP FREE CSCP MCQ Questions and Answers 4

Question 1

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

Accepted Answer

Mean absolute deviation (MAD)

Answer

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

Question 2

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

Accepted Answer

The forecast is biased and consistently under-forecasting

Answer

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

Question 3

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

Accepted Answer

A items

Answer

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

Question 4

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

Accepted Answer

Safety stock

Answer

Safety stock buffers against variability in demand and lead time.

Question 5

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

Accepted Answer

The sum of ordering costs and carrying costs

Answer

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

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