CPIM Demand Management & Forecasting 4

Question 1

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:

Accepted Answer

Remove the outlier and use adjusted data

Answer

Outliers from one-time events should be removed or adjusted before computing the moving average to prevent distortion of future forecasts.

Question 2

The Sales & Operations Planning (S&OP) process reconciles which two plans?

Accepted Answer

Demand plan and supply/capacity plan

Answer

S&OP balances the demand plan (sales forecast) against the supply/capacity plan to create an aligned business plan.

Question 3

Which forecasting error metric penalizes large errors more heavily than small ones?

Accepted Answer

Mean Squared Error (MSE)

Answer

MSE squares each error before averaging, which disproportionately penalizes large forecast errors compared to MAD or MAPE.

Question 4

Which scenario best justifies using a qualitative forecasting method over a quantitative one?

Accepted Answer

A new product launch with no historical data

Answer

Qualitative methods such as market research or expert opinion are necessary when no historical data exists, such as for new product introductions.

Question 5

A distribution center serving multiple retail stores aggregates their demand before forecasting. This technique leverages:

Accepted Answer

Pooling effect reducing total variability

Answer

Aggregating demand across multiple locations pools variability, reducing total forecast error through statistical averaging of independent demand streams.

(CPIM) Certified in Planning and Inventory Management Practice Test

(CPIM) Certified in Planning and Inventory Management Practice Test

CPIM Demand Management & Forecasting 4