CIM Demand Forecasting & Supply Planning 3 — Questions and Answers
Question 1: In a Make-to-Stock (MTS) environment, the master production schedule (MPS) is primarily driven by:
- Customer orders
- Demand forecasts (Correct answer)
- Supplier lead times
- Current inventory levels only
Correct answer: Demand forecasts
In MTS environments, production is planned ahead of orders based on demand forecasts, since products are built to anticipated demand.
Question 2: Which planning horizon is typically used for a Sales & Operations Planning (S&OP) process?
- 1–4 weeks
- 3–18 months (Correct answer)
- 5–10 years
- 1–3 days
Correct answer: 3–18 months
S&OP typically covers a rolling 3–18 month horizon, balancing supply capacity with aggregate demand plans at a monthly or quarterly level.
Question 3: A SKU has the following data: Average demand = 100 units/week, lead time = 3 weeks, service level Z = 1.65, and demand standard deviation = 20 units/week. What is the safety stock?
- 33 units
- 57 units (Correct answer)
- 100 units
- 20 units
Correct answer: 57 units
Safety stock = Z × σ × √LT = 1.65 × 20 × √3 ≈ 1.65 × 20 × 1.732 ≈ 57 units.
Question 4: Collaborative Planning, Forecasting, and Replenishment (CPFR) is best described as:
- An internal inventory counting procedure
- A retailer-supplier process for jointly developing forecasts and replenishment plans (Correct answer)
- A statistical forecasting algorithm
- A warehouse management system module
Correct answer: A retailer-supplier process for jointly developing forecasts and replenishment plans
CPFR is a business practice where trading partners share data and jointly create forecasts and replenishment orders to improve supply chain efficiency.
Question 5: Which type of demand is directly driven by customer orders and is independent of other items?
- Dependent demand
- Independent demand (Correct answer)
- Derived demand
- Lumpy demand
Correct answer: Independent demand
Independent demand originates externally from the market and is not tied to the production of any other product; it must be forecasted.
Question 6: A company uses a 4-period moving average. Last four periods' demand was 80, 90, 100, 110. What is the forecast for next period?
- 100 (Correct answer)
- 95
- 105
- 110
Correct answer: 100
The 4-period moving average is (80 + 90 + 100 + 110) / 4 = 380 / 4 = 95... wait — (80+90+100+110)/4 = 95. The correct answer is 95.
Question 7: Which supply planning concept defines the time fence within which the master schedule is 'frozen' and changes are not permitted?
- Demand time fence (Correct answer)
- Planning time fence
- Fixed order period
- Reorder point
Correct answer: Demand time fence
The demand time fence is the period closest to the present where the MPS is frozen to protect production from disruptive last-minute changes.
CIM Demand Forecasting & Supply Planning 3
In a Make-to-Stock (MTS) environment, the master production schedule (MPS) is primarily driven by: