Demand Forecasting and Planning: Master the Art of Predicting Customer Demand

Question 1

Which of the following is NOT a benefit of accurate demand forecasting?

Accepted Answer

Increased production costs

Answer

Reduced inventory costs

Answer

Improved customer service

Answer

Increased sales and profits

Question 2

Which of the following is NOT a characteristic of a quantitative demand forecasting technique?

Accepted Answer

Involves subjective judgment

Answer

Relies on historical data

Answer

Uses statistical methods

Answer

Provides numerical estimates

Question 3

Which type of data is commonly utilized in quantitative demand forecasting?

Accepted Answer

Historical sales data

Answer

Customer surveys

Answer

Expert opinions

Answer

Social media data

Question 4

What is the primary benefit of using a rolling forecast in demand forecasting?

Accepted Answer

Continuous updating of the forecast as new data becomes available

Answer

Reduction of the impact of outliers on the forecast

Answer

Improvement in forecast accuracy and reliability

Answer

Elimination of the need for periodic reforecasting

Question 5

Which of the following is NOT a potential benefit of demand forecasting?

Accepted Answer

Elimination of demand uncertainty

Answer

Enhanced production planning

Answer

Reduced inventory costs

Answer

Improved customer satisfaction

Question 6

What is the primary goal of a demand plan?

Accepted Answer

To meet customer demand efficiently while minimizing costs

Answer

To eliminate inventory

Answer

To maximize production output

Answer

To reduce lead time

Question 7

Which of the following is a commonly used performance metric for evaluating demand forecasting accuracy?

Accepted Answer

Mean absolute percentage error (MAPE)

Answer

Inventory turnover

Answer

Customer satisfaction index (CSI)

Answer

Return on investment (ROI)

Question 8

Which of the following is not a challenge associated with demand forecasting?

Accepted Answer

Perfect information being readily available

Answer

Uncertainty and volatility

Answer

Data availability and quality

Answer

Lack of qualified professionals

Question 9

What is the primary goal of demand planning in supply chain management?

Accepted Answer

To guarantee customer satisfaction

Answer

To minimize inventory levels

Answer

To optimize production schedules

Answer

To reduce transportation costs

Question 10

Which factor is NOT taken into account in qualitative demand forecasting?

Accepted Answer

Historical data

Answer

Expert opinion

Answer

Market research

Answer

Salesforce feedback

Question 11

What is the distinction between time series and cross-sectional data in demand forecasting?

Accepted Answer

Time series data captures patterns over time, while cross-sectional data captures data at a single point in time.

Answer

Cross-sectional data captures patterns over time, while time series data captures data at a single point in time.

Answer

Time series data captures relationships between variables, while cross-sectional data captures patterns over time.

Answer

Cross-sectional data captures relationships between variables, while time series data captures patterns over time.

Question 12

What is the purpose of using confidence intervals in demand forecasting?

Accepted Answer

To forecast the range of possible future demand

Answer

To identify outliers in the data

Answer

To assess the stability of demand patterns

Answer

To verify the forecasting model

Question 13

What is the primary objective of demand planning in supply chain management?

Accepted Answer

To balance supply and demand to optimize resource utilization

Answer

To predict future demand with 100% accuracy

Answer

To reduce inventory levels to the bare minimum

Answer

To eliminate all uncertainty from the supply chain

Question 14

What is the purpose of a demand curve?

Accepted Answer

To illustrate the relationship between price and quantity demanded for a product or service

Answer

To predict future demand based on historical data

Answer

To determine the optimal price for a product to maximize revenue

Answer

To identify potential market opportunities and unmet customer needs

Question 15

How does changing a key input in a demand forecasting model affect the accuracy of the forecast?

Accepted Answer

Changing inputs affects accuracy because it shows how sensitive the model is to changes.

Answer

Model sensitivity only applies to models with seasonal demand.

Answer

Changing inputs has no impact on forecast accuracy.

Answer

Model sensitivity is unrelated to forecast reliability.

Question 16

A forecasting method that utilizes previous demand data to predict future demand, making it suitable for stable demand patterns, is:

Accepted Answer

Simple exponential smoothing

Answer

Linear regression

Answer

Multiple regression

Answer

Judgmental forecasting

Question 17

The primary purpose of maintaining safety stock in inventory management is to:

Accepted Answer

Mitigate the risk of stockouts due to unexpected demand fluctuations

Answer

Reduce the lead time for ordering and replenishment

Answer

Lower inventory carrying costs through economies of scale

Answer

Enhance customer service by ensuring product availability

Question 18

A demand planning technique that involves dividing demand into smaller, more manageable components for analysis and planning is known as:

Accepted Answer

Disaggregation

Answer

Aggregate planning

Answer

Demand mapping

Answer

Scenario planning

Question 19

A persistent underestimation of demand in demand forecasting is referred to as:

Accepted Answer

Bias

Answer

Variance

Answer

Autocorrelation

Answer

Mean absolute error

Question 20

Which qualitative demand forecasting technique relies on expert opinions and surveys?

Accepted Answer

Delphi method

Answer

Historical data analysis

Answer

Exponential smoothing

Answer

Regression analysis

Question 21

What technique adjusts demand forecasts to account for seasonal fluctuations?

Accepted Answer

Seasonality index

Answer

Exponential smoothing

Answer

Moving average

Answer

Linear regression

Question 22

What is the primary purpose of maintaining safety stock inventory?

Accepted Answer

Buffer against variations in demand patterns

Answer

Reduce production lead times

Answer

Cut inventory expenses

Answer

Improve customer responsiveness

Question 23

Which type of demand pattern is characterized by unpredictable and sporadic demand?

Accepted Answer

Intermittent demand

Answer

Trended demand

Answer

Seasonal demand

Answer

Cyclical demand

Question 24

Which of the following is NOT a benefit of accurate demand forecasting in supply chain management?

Accepted Answer

Increased procurement costs

Answer

Improved production planning

Answer

Reduced inventory costs

Answer

Enhanced customer satisfaction

Question 25

Which demand forecasting technique employs historical data to predict future demand patterns and trends?

Accepted Answer

Time series analysis

Answer

Regression analysis

Answer

Delphi method

Answer

Expert opinion

Question 26

What is the term for the process of aligning supply with demand to fulfill customer requirements?

Accepted Answer

Demand planning

Answer

Production planning

Answer

Inventory management

Answer

Transportation management

Question 27

What is the purpose of safety stock in demand planning?

Accepted Answer

To mitigate unexpected fluctuations in demand

Answer

To reduce inventory carrying costs

Answer

To enhance production efficiency

Answer

To improve customer service levels

Question 28

How does incorporating seasonality, trends, and other relevant patterns improve demand forecasting accuracy? Provide a real-world example to illustrate your answer.

Accepted Answer

Incorporating seasonality, trends, and patterns enhances forecast accuracy.

Answer

Seasonality and trends are only important for long-term forecasting.

Answer

Demand forecasting should only consider recent data.

Answer

Demand is too unpredictable to benefit from considering patterns.

Question 29

What is the key difference between demand planning and demand forecasting?

Accepted Answer

Demand planning involves developing strategies to meet future demand, while demand forecasting involves predicting future demand.

Answer

Demand planning focuses on the long term, while demand forecasting focuses on the short term.

Answer

Demand forecasting is more quantitative, while demand planning is more qualitative.

Answer

There is no difference between demand planning and demand forecasting.

Question 30

What is the primary purpose of maintaining a safety stock in inventory management?

Accepted Answer

To protect against unexpected demand fluctuations

Answer

To reduce the cost of inventory holding

Answer

To improve customer service levels

Answer

To increase production flexibility

Question 31

Which of the following is a key advantage of using a rolling forecast?

Accepted Answer

It provides more up-to-date demand information

Answer

It is less sensitive to outliers in the data

Answer

It requires less data to generate

Answer

It is more accurate than a static forecast

Question 32

Which quantitative demand forecasting technique leverages historical data to predict future demand?

Accepted Answer

Exponential smoothing

Answer

Market research

Answer

Delphi method

Answer

Sales force composite

Question 33

How does the competitive landscape influence demand forecasting?

Accepted Answer

Analyzing the competitive landscape provides valuable insights into potential market share shifts and demand fluctuations.

Answer

The competitive landscape has minimal impact on demand forecasting, as demand is primarily driven by internal factors.

Answer

The competitive landscape enables forecasters to accurately predict specific competitor actions.

Answer

The competitive landscape is only relevant for demand forecasting in highly competitive industries.

Question 34

Which of the following is a qualitative demand forecasting technique?

Accepted Answer

Expert opinion

Answer

Time series analysis

Answer

Exponential smoothing

Answer

Regression analysis

Question 35

What is the primary objective of demand planning?

Accepted Answer

To align supply with customer demand

Answer

To minimize inventory costs

Answer

To maximize customer service levels

Answer

To reduce production lead times

Question 36

Which of the following factors should NOT be considered when selecting a demand forecasting method?

Accepted Answer

Company culture

Answer

Data availability

Answer

Forecast horizon

Answer

Accuracy requirements

Question 37

What is the purpose of using a moving average in demand forecasting?

Accepted Answer

To smooth out random fluctuations in demand

Answer

To identify seasonal patterns

Answer

To calculate the mean absolute deviation

Answer

To predict future demand

Question 38

How do demand forecasting accuracy metrics, such as mean absolute percentage error (MAPE) and root mean squared error (RMSE), impact supply chain performance?

Accepted Answer

Lower MAPE and RMSE indicate better supply chain performance, as they represent a closer alignment between forecast and actual demand.

Answer

Higher MAPE and RMSE indicate better supply chain performance, as they represent a smaller gap between forecast and actual demand.

Answer

MAPE is only used to evaluate intermittent demand, while RMSE is more appropriate for continuous demand.

Answer

Demand forecasting accuracy metrics have a minimal impact on supply chain performance.

Question 39

Which statistical demand forecasting method analyzes historical data to identify patterns and trends?

Accepted Answer

Time series analysis

Answer

Expert opinion survey

Answer

Delphi method

Answer

Regression analysis

Question 40

Which technique employed in demand forecasting is NOT a qualitative method?

Accepted Answer

Time series analysis

Answer

Market research

Answer

Delphi method

Answer

Expert opinion

Question 41

In the context of time series decomposition, historical demand data is broken down into which primary components?

Accepted Answer

Trend, seasonality, residual

Answer

Trend, seasonality, cyclicity

Answer

Trend, residual, autocorrelation

Answer

Seasonality, cycle, event

Question 42

The primary objective of demand planning in supply chain management is to:

Accepted Answer

Ensure alignment between production and customer demand

Answer

Enhance customer satisfaction

Answer

Minimize inventory holding costs

Question 43

The main purpose of including Safety Stock in demand planning is to:

Accepted Answer

Buffer against unforeseen fluctuations in demand

Answer

Speed up production rates

Answer

Reduce inventory costs

Answer

Increase customer service levels

Question 44

What key difference exists between deterministic and stochastic demand?

Accepted Answer

Deterministic demand is known with certainty, while stochastic demand involves variability

Answer

Deterministic demand is based on historical data, while stochastic demand is based on future expectations

Answer

Deterministic demand is influenced by external factors, while stochastic demand is not

Question 45

When using historical demand data for forecasting, which potential limitation should be considered?

Accepted Answer

It may not reflect potential changes in demand

Answer

It is only suitable for long-term forecasting

Answer

It is challenging to collect and analyze

Answer

It is heavily influenced by seasonality

Question 46

In demand planning, what is the significance of collaboration?

Accepted Answer

To facilitate alignment and coordination among stakeholders

Answer

To gather market intelligence

Answer

To generate demand forecasts

Question 47

Which of the following is a qualitative demand forecasting technique that relies on expert opinion and structured questioning?

Accepted Answer

Delphi method

Answer

Moving averages

Answer

Regression analysis

Question 48

What is the primary purpose of using seasonal indices in demand forecasting?

Accepted Answer

To adjust historical demand data for recurring seasonal patterns and variations.

Answer

To identify long-term demand trends.

Answer

To estimate future demand based on historical averages.

Question 49

Which of the following factors would be considered in developing a strategic demand plan?

Accepted Answer

Long-term economic trends and market projections

Answer

Daily sales figures

Answer

Short-term customer orders

Answer

Current inventory levels

Question 50

What is the key difference between a rolling forecast and a static forecast?

Accepted Answer

A rolling forecast is continuously updated with new data, while a static forecast is based on a fixed set of historical data.

Answer

A rolling forecast is used for short-term planning, while a static forecast is used for long-term planning.

Answer

A rolling forecast is more accurate than a static forecast.

Question 51

Which of the following error measures is commonly used to quantify the accuracy of demand forecasts?

Accepted Answer

Mean absolute deviation (MAD)

Answer

Net present value (NPV)

Answer

Return on investment (ROI)

Answer

Internal rate of return (IRR)

Question 52

What is a critical benefit of fostering collaboration in the demand planning process?

Accepted Answer

Ensuring alignment and coordination among different departments and stakeholders within the organization.

Answer

Eliminating the requirement for forecasting techniques

Answer

Reducing the need for historical data analysis

Question 53

What is the approximate horizon length for an operational demand plan?

Accepted Answer

3 to 12 months

Answer

5 to 10 years

Answer

1 to 5 years

Answer

1 to 3 days

Question 54

What is the primary purpose of maintaining a safety stock in inventory management?

Accepted Answer

To provide a buffer against unexpected variations in demand and prevent stockouts

Answer

To reduce the need for demand forecasting

Answer

To increase the accuracy of demand plans

Answer

To eliminate the risk of overstocking