Demand Management & Forecasting Flashcards

Which forecasting technique uses a weighted average where more recent data points receive higher weights?

Answer: Exponential smoothing

Exponential smoothing applies exponentially decreasing weights to past observations, giving the most recent data the highest influence.

A company notices that demand for its product consistently spikes every December and dips every July. This pattern is best described as:

Answer: Seasonal variation

Seasonal variation refers to recurring demand fluctuations tied to specific times of year, months, or seasons.

Mean Absolute Deviation (MAD) is used in forecasting primarily to:

Answer: Measure forecast accuracy

MAD measures forecast accuracy by averaging the absolute differences between forecasted and actual demand.

Which demand management concept refers to translating customer orders and forecasts into a single unified plan used for scheduling?

Answer: Demand planning consensus

Demand planning consensus integrates sales forecasts, customer orders, and market intelligence into a single agreed-upon demand plan.

When forecast error consistently shows actual demand higher than forecasted demand, this bias is called:

Answer: Positive bias

Positive bias occurs when forecasts consistently underestimate actual demand, meaning actuals are repeatedly higher than predicted.

A tracking signal value that consistently moves in one direction beyond acceptable limits indicates:

Answer: The forecast model is biased and needs revision

A tracking signal outside control limits signals systematic bias in the forecast model, requiring recalibration or a new model.

In collaborative planning, forecasting, and replenishment (CPFR), which trading partners are primarily involved?

Answer: Retailers and suppliers sharing data collaboratively

CPFR is a supply chain initiative where retailers and suppliers share forecasts, promotional plans, and inventory data to improve replenishment accuracy.