Demand Management & Forecasting 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 & Forecasting flashcards as text
In a 4-period simple moving average, if the most recent period's actual demand is unusually high due to a one-time event, the best action is to:
Answer: Remove the outlier and use adjusted data
Outliers from one-time events should be removed or adjusted before computing the moving average to prevent distortion of future forecasts.
The Sales & Operations Planning (S&OP) process reconciles which two plans?
Answer: Demand plan and supply/capacity plan
S&OP balances the demand plan (sales forecast) against the supply/capacity plan to create an aligned business plan.
Which forecasting error metric penalizes large errors more heavily than small ones?
Answer: Mean Squared Error (MSE)
MSE squares each error before averaging, which disproportionately penalizes large forecast errors compared to MAD or MAPE.
Which scenario best justifies using a qualitative forecasting method over a quantitative one?
Answer: A new product launch with no historical data
Qualitative methods such as market research or expert opinion are necessary when no historical data exists, such as for new product introductions.
A distribution center serving multiple retail stores aggregates their demand before forecasting. This technique leverages:
Answer: Pooling effect reducing total variability
Aggregating demand across multiple locations pools variability, reducing total forecast error through statistical averaging of independent demand streams.
Which of the following causes the bullwhip effect in a supply chain?
Answer: Small order batching and demand signal amplification upstream
The bullwhip effect is caused by demand signal distortion as orders move upstream, amplified by order batching, lead time variability, and lack of information sharing.
When decomposing a demand time series, which component represents the overall long-term upward or downward movement in demand?
Answer: Trend component
The trend component captures the long-term direction of demand, whether consistently increasing, decreasing, or flat over time.