CPIM Demand Management and Forecasting 2 — Questions and Answers
Question 1: What is 'collaborative planning, forecasting, and replenishment' (CPFR)?
- A supply chain practice where trading partners jointly develop forecasts and replenishment plans (Correct answer)
- A government compliance program
- An internal financial planning process
- A warehouse management methodology
Correct answer: A supply chain practice where trading partners jointly develop forecasts and replenishment plans
CPFR is a collaborative process in which retailers and suppliers share data and jointly create forecasts and replenishment plans to improve supply chain performance.
Question 2: Which component of demand is caused by regular, repeating patterns tied to a calendar cycle?
- Seasonality (Correct answer)
- Trend
- Randomness
- Cyclical variation
Correct answer: Seasonality
Seasonality describes demand patterns that repeat predictably within a year, such as holiday spikes or summer peaks.
Question 3: What is the 'bullwhip effect' in supply chain demand management?
- The amplification of demand variability as orders move upstream in the supply chain (Correct answer)
- A lean manufacturing technique for smoothing production
- A method for accelerating supplier shipments
- A type of demand forecasting error
Correct answer: The amplification of demand variability as orders move upstream in the supply chain
The bullwhip effect describes how small demand variations at the retail level become increasingly amplified as they travel upstream to manufacturers and suppliers.
Question 4: What is 'demand sensing' in modern supply chain management?
- Using short-term, high-frequency data (POS, shipments) to detect real-time demand signals (Correct answer)
- Measuring warehouse temperature and humidity
- Tracking customer satisfaction in real time
- Monitoring social media for brand mentions
Correct answer: Using short-term, high-frequency data (POS, shipments) to detect real-time demand signals
Demand sensing uses near-real-time data such as point-of-sale information to detect and respond to actual demand faster than traditional forecasting.
Question 5: Which demand management technique smooths out demand peaks by influencing customer timing?
- Demand shaping (e.g., promotions, pricing incentives) (Correct answer)
- Safety stock building
- Expediting
- Subcontracting
Correct answer: Demand shaping (e.g., promotions, pricing incentives)
Demand shaping uses pricing, promotions, or incentives to shift customer demand from peak periods to slower periods, leveling the overall demand curve.
Question 6: What is a 'tracking signal' used for in forecast monitoring?
- To detect when forecast errors are accumulating in one direction, signaling bias (Correct answer)
- To track shipment locations
- To monitor machine performance
- To count inventory transactions
Correct answer: To detect when forecast errors are accumulating in one direction, signaling bias
A tracking signal is calculated by dividing the running sum of forecast errors by MAD; values outside set limits indicate systematic forecast bias.
CPIM Demand Management and Forecasting 2
What is 'collaborative planning, forecasting, and replenishment' (CPFR)?