Supply Chain Management Demand Planning 4

Question 1

Which of the following is a key limitation of using only historical sales data for demand forecasting?

Accepted Answer

It captures lost sales caused by stockouts as if demand were lower

Answer

Historical shipment data reflects what was sold (supply-constrained), not what customers wanted, so stockout periods artificially suppress apparent demand.

Question 2

A demand planner uses a smoothing constant (alpha) of 0.9 in exponential smoothing. This implies:

Accepted Answer

Very high responsiveness to recent demand changes

Answer

A high alpha (close to 1) gives most weight to the most recent observation, making the forecast highly reactive to recent changes.

Question 3

In the context of demand planning, 'consensus forecasting' refers to:

Accepted Answer

Aligning multiple stakeholder inputs (sales, marketing, finance) into a single agreed-upon forecast

Answer

Consensus forecasting brings together perspectives from sales, marketing, finance, and supply chain to produce a single agreed forecast that drives planning.

Question 4

Which demand planning concept refers to the practice of holding extra inventory to protect against forecast uncertainty?

Accepted Answer

Safety stock

Answer

Safety stock is buffer inventory calculated based on demand variability and service level targets to protect against stockouts from forecast error.

Question 5

A product's demand history shows a consistent upward trend of 50 units per month. Which forecasting method is best suited to capture this pattern?

Accepted Answer

Double exponential smoothing (Holt's method)

Answer

Holt's double exponential smoothing explicitly models both the level and trend components of a time series, making it appropriate for trended data.

Supply Chain Management Practice Test

Supply Chain Management Practice Test

Supply Chain Management Demand Planning 4