CIM Demand Forecasting & Supply Planning 4

Question 1

Which forecasting approach uses external indicators such as housing starts or GDP to predict future demand?

Accepted Answer

Econometric/causal modeling

Answer

Causal (econometric) models identify relationships between demand and external variables (leading indicators) to generate forecasts.

Question 2

In the context of supply planning, 'Available to Promise (ATP)' represents:

Accepted Answer

Uncommitted inventory that can be promised to new customer orders

Answer

ATP is the portion of on-hand inventory and planned production not yet committed to customer orders, used to confirm delivery dates.

Question 3

Forecast error that follows a random pattern with no consistent over- or under-prediction is called:

Accepted Answer

White noise / random error

Answer

Random (white noise) error has no pattern and averages to zero over time, indicating the forecasting model has captured all systematic components of demand.

Question 4

A company experiences demand spikes every December due to holiday shopping. This pattern is an example of:

Accepted Answer

Seasonal variation

Answer

Seasonal variation refers to regular, predictable demand fluctuations that repeat within a year, often tied to calendar events or weather.

Question 5

Which of the following metrics measures the average number of absolute forecast errors, expressed in original demand units?

Accepted Answer

MAD (Mean Absolute Deviation)

Answer

MAD measures forecast accuracy by averaging the absolute values of forecast errors in the same units as the original demand data.

(CIM) Certified Inventory Manager Practice Test

(CIM) Certified Inventory Manager Practice Test

CIM Demand Forecasting & Supply Planning 4