CPIM Demand Management and Forecasting

Question 1

Which forecasting method uses the average of a specific number of the most recent historical periods?

Accepted Answer

Simple moving average

Answer

Exponential smoothing

Answer

Regression analysis

Answer

Delphi method

Question 2

What is 'exponential smoothing' and what is the smoothing constant (alpha) used for?

Accepted Answer

A forecasting method that weights recent data more heavily; alpha controls how quickly old data is discounted

Answer

A technique for smoothing out manufacturing defects

Answer

A process for leveling production workloads

Answer

A method for averaging supplier prices

Question 3

What does 'mean absolute deviation' (MAD) measure in forecasting?

Accepted Answer

The average absolute error between forecast and actual demand

Answer

The maximum forecast error in a period

Answer

The percentage by which forecast exceeds actual demand

Answer

The standard deviation of safety stock

Question 4

Which forecasting technique relies on expert opinion and consensus rather than historical data?

Accepted Answer

Delphi method

Answer

Simple moving average

Answer

Linear regression

Answer

Seasonal index

Question 5

What is 'forecast bias' and why is it a concern?

Accepted Answer

A consistent tendency to over- or under-forecast, leading to systematic inventory or service errors

Answer

Random forecasting errors that cancel out over time

Answer

A measure of forecast speed

Answer

A supplier's delivery variability

Question 6

What is a 'seasonal index' used for in demand forecasting?

Accepted Answer

To adjust historical demand data to account for predictable seasonal patterns

Answer

To rank suppliers by seasonal performance

Answer

To set safety stock levels in winter months

Answer

To calculate the economic order quantity