Supply Chain Management Demand Planning 3 — Questions and Answers
Question 1: Collaborative Planning, Forecasting, and Replenishment (CPFR) primarily improves demand planning by:
- Automating purchase orders
- Sharing data and forecasts between trading partners (Correct answer)
- Replacing statistical models with AI
- Eliminating safety stock requirements
Correct answer: Sharing data and forecasts between trading partners
CPFR reduces the bullwhip effect and improves accuracy by enabling retailers and suppliers to jointly develop and share forecasts.
Question 2: What does a Demand Signal Repository (DSR) primarily store?
- Warehouse inventory levels
- Point-of-sale and consumer demand data from multiple sources (Correct answer)
- Supplier lead time records
- Production capacity constraints
Correct answer: Point-of-sale and consumer demand data from multiple sources
A DSR aggregates granular downstream demand signals such as POS data, enabling more accurate and timely demand sensing.
Question 3: Which of the following best describes 'demand shaping' in supply chain management?
- Adjusting production schedules to match incoming orders
- Using promotions or pricing to influence customer demand toward preferred products (Correct answer)
- Forecasting demand based on historical patterns
- Allocating limited supply among competing customers
Correct answer: Using promotions or pricing to influence customer demand toward preferred products
Demand shaping uses commercial levers like promotions, pricing, and product substitution to actively steer demand toward supply-aligned outcomes.
Question 4: In a causal forecasting model, an example of an independent variable used to predict product demand would be:
- Last month's sales
- Regional GDP growth rate (Correct answer)
- Inventory turnover ratio
- Days of supply on hand
Correct answer: Regional GDP growth rate
Causal models use external drivers like economic indicators, weather, or demographic data as independent variables to explain and predict demand.
Question 5: The 'forecast horizon' in demand planning refers to:
- The maximum forecast error allowed before re-planning
- How far into the future the forecast extends (Correct answer)
- The number of SKUs included in the forecast
- The lag between forecast creation and order placement
Correct answer: How far into the future the forecast extends
Forecast horizon defines the time period covered by the forecast, ranging from short-term operational (days/weeks) to long-term strategic (years).
Question 6: Which scenario represents an example of the 'new product forecasting' challenge?
- Forecasting a product with 3 years of stable sales history
- Estimating demand for a product launch with no historical data (Correct answer)
- Predicting seasonal demand for an established holiday item
- Calculating reorder points for a slow-moving SKU
Correct answer: Estimating demand for a product launch with no historical data
New product forecasting is particularly challenging because there is no historical sales data, requiring analog products, market research, or judgment-based methods.
Question 7: When a demand plan is adjusted upward based on a planned promotional event, this adjustment is called a:
- Baseline forecast
- Lift factor
- Statistical override
- Demand lift event (Correct answer)
Correct answer: Demand lift event
A demand lift event (or promotional uplift) represents the incremental demand expected from a specific commercial activity layered on top of the baseline forecast.
Supply Chain Management Demand Planning 3
Collaborative Planning, Forecasting, and Replenishment (CPFR) primarily improves demand planning by: