CPIM Demand Management & Forecasting 5 — Questions and Answers
Question 1: Which demand planning concept involves breaking down an aggregate forecast into individual SKU or location-level forecasts?
- Demand aggregation
- Demand disaggregation (Correct answer)
- Demand sensing
- Demand consensus
Correct answer: Demand disaggregation
Demand disaggregation splits a higher-level aggregate forecast down to granular levels such as SKU, region, or customer.
Question 2: A company's product has a seasonal index of 1.3 for Q4. If the annual average monthly demand is 1,000 units, what is the expected Q4 monthly demand?
- 700 units
- 1,000 units
- 1,300 units (Correct answer)
- 1,030 units
Correct answer: 1,300 units
A seasonal index of 1.3 means Q4 demand is 30% above average, so 1,000 × 1.3 = 1,300 units.
Question 3: Which measure expresses forecast error as a percentage of actual demand, making it useful for comparing accuracy across products with different volume scales?
- MAD
- MSE
- MAPE (Correct answer)
- Tracking signal
Correct answer: MAPE
MAPE (Mean Absolute Percentage Error) normalizes error as a percentage of actual demand, enabling apples-to-apples comparison across different product volumes.
Question 4: Available-to-Promise (ATP) is calculated as:
- Forecasted demand minus on-hand inventory
- On-hand inventory plus scheduled receipts minus committed orders (Correct answer)
- Safety stock plus reorder point
- Customer orders minus backorders
Correct answer: On-hand inventory plus scheduled receipts minus committed orders
ATP represents supply that is available to commit to new customer orders: on-hand inventory plus scheduled receipts, minus orders already committed.
Question 5: In demand management, 'planned orders' differ from 'firm planned orders' in that firm planned orders:
- Are generated automatically by MRP and change each run
- Are manually frozen by planners to prevent automatic MRP changes (Correct answer)
- Are always placed with external suppliers
- Cannot be expedited or de-expedited
Correct answer: Are manually frozen by planners to prevent automatic MRP changes
Firm planned orders are manually frozen by planners so that MRP does not automatically reschedule or change them during regenerative planning runs.
Question 6: Which forecasting approach is most appropriate for a new product that is similar to an existing product already in the portfolio?
- Delphi method
- Analogous forecasting (Correct answer)
- Time series decomposition
- Box-Jenkins ARIMA
Correct answer: Analogous forecasting
Analogous forecasting uses historical demand data from a similar existing product as a proxy to estimate demand for the new product.
Question 7: Which of the following actions would most directly reduce forecast error for a product with highly lumpy demand?
- Increasing the smoothing constant alpha
- Collaborating with key customers to share their forward order plans (Correct answer)
- Using a shorter moving average period
- Switching from MAPE to MAD as the error metric
Correct answer: Collaborating with key customers to share their forward order plans
Lumpy demand is often driven by large, infrequent orders from a few customers; sharing forward order visibility eliminates the uncertainty that creates lumpiness.
CPIM Demand Management & Forecasting 5
Which demand planning concept involves breaking down an aggregate forecast into individual SKU or location-level forecasts?