Demand Management Flashcards
7 cards from real CPIM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Demand Management flashcards as text
In a make-to-order environment, the demand management function primarily focuses on:
Answer: Managing the customer order backlog and promising delivery dates
In make-to-order environments there is no finished goods inventory buffer, so managing customer orders and accurate order promising are the core demand management activities.
Which forecasting technique is most appropriate when there is no historical data available for a new product?
Answer: Market research and analogous product analysis
Without historical data, qualitative methods such as market research or comparison to analogous products are necessary to generate initial demand estimates.
The Master Production Schedule (MPS) consumes the forecast by:
Answer: Using actual customer orders to replace forecast in the near-term planning horizon
As actual orders are received, they consume (replace) the forecast in the near-term horizon so that the MPS reflects real demand rather than double-counting.
A company experiences a sudden one-time spike in demand due to a competitor going out of business. When updating the forecast, the planner should:
Answer: Treat the spike as an outlier and exclude or dampen it from forecast calculations
One-time non-recurring events are outliers that distort the statistical forecast and should be excluded or dampened so they don't inflate future predictions.
Which of the following best describes 'dependent demand'?
Answer: Demand calculated from the requirements for a parent item
Dependent demand is derived mathematically from the demand for a parent assembly or finished good, such as component parts required per unit of finished product.
Safety stock is primarily designed to protect against:
Answer: Variability in demand and/or supply lead time
Safety stock buffers against uncertainty in demand levels and supplier lead times to maintain a desired customer service level.
A planner is evaluating two forecasting models. Model A has a MAD of 50 and Model B has a MAD of 80 for the same item. Which model should be preferred and why?
Answer: Model A, because lower MAD indicates smaller average forecast errors
A lower MAD means the forecast errors are smaller on average, indicating Model A is the more accurate model for this item.