CSCP Demand Management 1 — Questions and Answers
Question 1: Which forecasting method uses a weighted average of past demand observations where more recent data receives higher weights?
- Simple moving average
- Exponential smoothing (Correct answer)
- Linear regression
- Naive forecasting
Correct answer: Exponential smoothing
Exponential smoothing assigns exponentially decreasing weights to older observations, giving more importance to recent demand data.
Question 2: What is the primary purpose of a Sales and Operations Planning (S&OP) process?
- To manage supplier contracts
- To align supply capabilities with demand requirements across functions (Correct answer)
- To generate purchase orders automatically
- To calculate safety stock levels
Correct answer: To align supply capabilities with demand requirements across functions
S&OP aligns sales, marketing, finance, and operations by balancing demand plans with supply capabilities at an aggregate level.
Question 3: Mean Absolute Deviation (MAD) is used in demand management primarily to:
- Calculate reorder points
- Measure forecast accuracy and error (Correct answer)
- Determine lot sizing
- Set customer service levels
Correct answer: Measure forecast accuracy and error
MAD measures the average absolute difference between forecasted and actual demand, indicating how accurate the forecast is.
Question 4: Which of the following best describes the 'bullwhip effect' in demand management?
- Seasonal demand peaks that occur at regular intervals
- Demand variability amplification as orders move upstream in the supply chain (Correct answer)
- The effect of price changes on customer demand
- Inventory build-up caused by long lead times
Correct answer: Demand variability amplification as orders move upstream in the supply chain
The bullwhip effect occurs when small demand fluctuations at the customer level are amplified into larger swings in orders placed upstream.
Question 5: In demand management, what is the difference between independent demand and dependent demand?
- Independent demand is for finished goods; dependent demand is derived from the demand for finished goods (Correct answer)
- Independent demand is predictable; dependent demand is unpredictable
- Independent demand comes from internal customers; dependent demand comes from external customers
- Independent demand is seasonal; dependent demand is constant
Correct answer: Independent demand is for finished goods; dependent demand is derived from the demand for finished goods
Independent demand comes directly from customer orders for finished goods, while dependent demand is calculated from the bill of materials based on production requirements.
Question 6: Which technique involves sharing actual point-of-sale data between retailers and suppliers to improve demand forecasting?
- Vendor Managed Inventory (VMI)
- Collaborative Planning, Forecasting, and Replenishment (CPFR) (Correct answer)
- Economic Order Quantity (EOQ)
- Master Production Scheduling (MPS)
Correct answer: Collaborative Planning, Forecasting, and Replenishment (CPFR)
CPFR is a business practice that combines information sharing and synchronized planning between trading partners to improve supply chain efficiency.
Question 7: What is demand sensing in the context of modern supply chain management?
- Using historical data to build long-term forecasts
- Using real-time or near-real-time data to improve short-term demand forecasting accuracy (Correct answer)
- Detecting counterfeit products in the supply chain
- Measuring customer satisfaction with demand fulfillment
Correct answer: Using real-time or near-real-time data to improve short-term demand forecasting accuracy
Demand sensing leverages real-time signals such as POS data, social media, and IoT data to generate more accurate near-term forecasts.
CSCP Demand Management 1
Which forecasting method uses a weighted average of past demand observations where more recent data receives higher weights?