CPIM Demand Management & Forecasting 2 — Questions and Answers
Question 1: Which forecasting technique uses a weighted average where more recent data points receive higher weights?
- Simple moving average
- Exponential smoothing (Correct answer)
- Linear regression
- Seasonal index method
Correct answer: Exponential smoothing
Exponential smoothing applies exponentially decreasing weights to past observations, giving the most recent data the highest influence.
Question 2: A company notices that demand for its product consistently spikes every December and dips every July. This pattern is best described as:
- Trend
- Cyclical variation
- Seasonal variation (Correct answer)
- Random variation
Correct answer: Seasonal variation
Seasonal variation refers to recurring demand fluctuations tied to specific times of year, months, or seasons.
Question 3: Mean Absolute Deviation (MAD) is used in forecasting primarily to:
- Calculate the trend line slope
- Measure forecast accuracy (Correct answer)
- Determine safety stock levels only
- Set the alpha smoothing constant
Correct answer: Measure forecast accuracy
MAD measures forecast accuracy by averaging the absolute differences between forecasted and actual demand.
Question 4: Which demand management concept refers to translating customer orders and forecasts into a single unified plan used for scheduling?
- Demand sensing
- Demand shaping
- Demand planning consensus (Correct answer)
- Available-to-promise
Correct answer: Demand planning consensus
Demand planning consensus integrates sales forecasts, customer orders, and market intelligence into a single agreed-upon demand plan.
Question 5: When forecast error consistently shows actual demand higher than forecasted demand, this bias is called:
- Positive tracking signal
- Negative bias
- Positive bias (Correct answer)
- Random error
Correct answer: Positive bias
Positive bias occurs when forecasts consistently underestimate actual demand, meaning actuals are repeatedly higher than predicted.
Question 6: A tracking signal value that consistently moves in one direction beyond acceptable limits indicates:
- The forecast model is performing well
- Demand is purely random
- The forecast model is biased and needs revision (Correct answer)
- Safety stock is too low
Correct 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.
Question 7: In collaborative planning, forecasting, and replenishment (CPFR), which trading partners are primarily involved?
- Only manufacturers and distributors
- Retailers and suppliers sharing data collaboratively (Correct answer)
- Government regulators and manufacturers
- Logistics providers and end customers
Correct 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.
CPIM Demand Management & Forecasting 2
Which forecasting technique uses a weighted average where more recent data points receive higher weights?