CLA Demand Planning & Forecasting 1 — Questions and Answers
Question 1: Which forecasting method uses the average of a fixed number of most recent periods to predict future demand?
- Simple moving average (Correct answer)
- Exponential smoothing
- Regression analysis
- Delphi method
Correct answer: Simple moving average
A simple moving average calculates the mean of the most recent n periods, dropping the oldest data point each time a new period is added.
Question 2: Exponential smoothing forecasting gives more weight to:
- Recent demand observations compared to older ones (Correct answer)
- Seasonal peaks only
- The oldest data in the series
- Expert opinion over historical data
Correct answer: Recent demand observations compared to older ones
Exponential smoothing applies a smoothing factor (alpha) that causes recent observations to have exponentially greater influence on the forecast than older data.
Question 3: Mean Absolute Deviation (MAD) measures forecast accuracy by calculating the:
- Average of absolute differences between actual and forecasted demand (Correct answer)
- Percentage of forecasts that were exactly correct
- Maximum error observed in any single period
- Variance of demand around its mean
Correct answer: Average of absolute differences between actual and forecasted demand
MAD averages the absolute values of forecast errors over a period, providing a unit-based measure of typical forecast deviation.
Question 4: Which component of a demand time series represents consistent upward or downward movement over time?
- Trend (Correct answer)
- Seasonality
- Cyclicality
- Random variation
Correct answer: Trend
Trend is the long-term directional movement in a data series, distinct from short-term seasonal or cyclical fluctuations.
Question 5: A demand signal from a retail point-of-sale system fed directly to suppliers to trigger replenishment is an example of:
- Demand-driven replenishment (Correct answer)
- Push-based inventory management
- Periodic review system
- Safety stock depletion
Correct answer: Demand-driven replenishment
Demand-driven replenishment uses actual consumption signals at the point of sale to pull inventory through the supply chain, reducing bullwhip effect.
Question 6: The Bullwhip Effect in supply chains describes how small changes in end-customer demand lead to:
- Progressively larger demand fluctuations as orders move upstream in the supply chain (Correct answer)
- Smaller order quantities at the manufacturing level
- Reduced lead times across all supply chain tiers
- Improved forecast accuracy at the supplier level
Correct answer: Progressively larger demand fluctuations as orders move upstream in the supply chain
The Bullwhip Effect amplifies demand variability as each tier adds safety stock buffers, causing upstream manufacturers to experience extreme swings from small retail changes.
CLA Demand Planning & Forecasting 1
Which forecasting method uses the average of a fixed number of most recent periods to predict future demand?