Demand Forecasting and Planning: Master the Art of Supply Chain Planning

Question 1

Which of the following is NOT a factor considered in demand forecasting?

Accepted Answer

Astrological predictions

Answer

Historical sales data

Answer

Market research

Answer

Economic indicators

Question 2

What is the primary objective of a production plan?

Accepted Answer

To determine the production schedule and resource allocation

Answer

To ensure product quality and safety

Answer

To manage customer orders and shipments

Answer

To control inventory levels

Question 3

Which inventory management strategy aims to maintain a consistent inventory level throughout the production cycle?

Accepted Answer

Just-in-Time (JIT)

Answer

Economic Order Quantity (EOQ)

Answer

Two-Bin System

Answer

Perpetual Inventory System

Question 4

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

Accepted Answer

To mitigate the risk of stockouts due to unexpected demand

Answer

To reduce production costs

Answer

To enhance customer satisfaction

Answer

To minimize inventory holding expenses

Question 5

Which demand forecasting method is most appropriate for products with predictable seasonal fluctuations?

Accepted Answer

SARIMA (Seasonal Autoregressive Integrated Moving Average)

Answer

Linear regression

Answer

Exponential smoothing

Answer

Moving averages

Question 6

In demand forecasting, what process involves identifying the most suitable method for a specific scenario?

Accepted Answer

Model selection

Answer

Data validation

Answer

Error measurement

Answer

Time series analysis

Question 7

Which factor is NOT relevant in determining safety stock levels?

Accepted Answer

Production capacity

Answer

Lead time

Answer

Demand variability

Answer

Storage costs

Question 8

What is the term for forecasting future demand based on historical data?

Accepted Answer

Time series forecasting

Answer

Queueing theory

Answer

Linear programming

Answer

Simulation

Question 9

Which demand pattern exhibits significant variability and brief lead times?

Accepted Answer

Intermittent demand

Answer

Seasonal demand

Answer

Trendy demand

Answer

Cyclical demand

Question 10

Which of the following is NOT a quantitative forecasting technique?

Accepted Answer

Expert opinion

Answer

Time series analysis

Answer

Regression analysis

Answer

Exponential smoothing

Question 11

What is the distinction between dependent and independent demand?

Accepted Answer

Dependent demand is influenced by other factors, while independent demand is not.

Answer

Independent demand is influenced by other factors, while dependent demand is not.

Answer

There is no difference between dependent and independent demand.

Answer

Both dependent and independent demand are influenced by external factors.

Question 12

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

Accepted Answer

It incorporates new data as it becomes available, improving forecast accuracy.

Answer

It reduces the impact of outliers, resulting in more stable forecasts.

Answer

It simplifies the forecasting process, making it less time-consuming and resource-intensive.

Answer

It eliminates the need for manual adjustments, automating the forecasting process.

Question 13

What is the role of safety stock in demand planning?

Accepted Answer

To buffer against unexpected fluctuations in demand, reducing the risk of stockouts.

Answer

To reduce the overall inventory levels, improving inventory turnover.

Answer

To increase customer satisfaction by ensuring product availability.

Answer

To simplify inventory management by eliminating the need for forecasting.

Question 14

Which of the following is NOT a method for evaluating forecast accuracy?

Accepted Answer

Correlation coefficient

Answer

Mean absolute deviation (MAD)

Answer

Root mean squared error (RMSE)

Answer

Tracking signal

Question 15

What is the significance of a demand review process?

Accepted Answer

To assess forecast accuracy, identify areas for improvement, and align forecasts with business objectives.

Answer

To update forecasts based on new information and communicate them to stakeholders.

Answer

To eliminate the need for demand planning and forecasting by relying solely on historical data.

Answer

To automate the demand planning process, reducing the involvement of human expertise.

Question 16

What is the primary goal of demand planning?

Accepted Answer

To optimize production and inventory

Answer

To create a sales forecast

Answer

To predict future demand

Answer

To manage customer relationships

Question 17

What is the key difference between a moving average and an exponential smoothing forecast?

Accepted Answer

Moving average considers all past data, while exponential smoothing gives more weight to recent data.

Answer

Moving average is more accurate for long-term forecasts, while exponential smoothing is better for short-term forecasts.

Answer

Exponential smoothing is more complex to calculate than moving average.

Answer

There is no difference between the two methods.

Question 18

Which of the following is NOT a common type of demand pattern?

Accepted Answer

Random

Answer

Seasonal

Answer

Trend

Answer

Cyclical

Question 19

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

Accepted Answer

To predict customer demand accurately

Answer

To minimize inventory levels

Answer

To optimize production schedules

Answer

To improve customer satisfaction

Question 20

What is the fundamental difference between demand-driven and supply-driven forecasting?

Accepted Answer

Demand-driven forecasts are based on market data, while supply-driven forecasts are based on production capacity.

Answer

Supply-driven forecasts are based on market data, while demand-driven forecasts are based on production capacity.

Answer

Demand-driven forecasts are more accurate than supply-driven forecasts.

Answer

Supply-driven forecasts are more accurate than demand-driven forecasts.

Question 21

Which demand forecasting technique involves gathering expert opinions through a series of questionnaires?

Accepted Answer

Delphi method

Answer

Exponential smoothing

Answer

Linear regression

Answer

Time series analysis

Question 22

What is the ultimate objective of demand planning?

Accepted Answer

To achieve all of the above

Answer

To anticipate customer demand

Answer

To optimize production schedules

Answer

To control inventory levels

Question 23

The Mean Absolute Deviation (MAD) in demand forecasting serves to:

Accepted Answer

Assess forecast accuracy

Answer

Identify data outliers

Answer

Determine forecast horizons

Answer

Estimate future demand

Question 24

Dependent demand differs from independent demand in that it:

Accepted Answer

Is influenced by the demand for other products

Answer

Is driven by external factors

Answer

Is more predictable

Answer

Has no distinction

Question 25

A key advantage of utilizing a rolling forecast in demand planning is that it:

Accepted Answer

Offers all of these benefits

Answer

Provides current forecasts

Answer

Mitigates the impact of outliers

Answer

Improves forecast accuracy

Question 26

Increasing production batch sizes generally leads to:

Accepted Answer

Higher inventory holding costs

Answer

Lower inventory holding costs

Answer

No change in inventory holding costs

Answer

Insufficient information to determine

Question 27

How can IoT (Internet of Things) devices improve the accuracy and responsiveness of demand forecasting?

Accepted Answer

Provide real-time data on customer behavior and preferences

Answer

Eliminate the need for historical data in forecasting

Answer

Reduce the lead time for production planning

Question 28

Which of the following methods is NOT a qualitative forecasting technique?

Accepted Answer

Time series analysis

Answer

Expert opinion

Answer

Scenario analysis

Answer

Delphi method

Question 29

In time series decomposition, which component represents the long-term growth or decline of the series?

Accepted Answer

Trend

Answer

Seasonal variation

Answer

Irregular variation

Answer

Cyclical variation

Question 30

What is the primary goal of demand planning?

Accepted Answer

To provide a basis for production and inventory decisions that meet customer demand while minimizing costs.

Answer

To accurately predict future demand without any error.

Answer

To reduce the risk of stockouts by holding excessive inventory.

Question 31

Which of the following is NOT an advantage of using an enterprise resource planning (ERP) system for demand planning?

Accepted Answer

Limited integration with other business functions

Answer

Centralized data storage

Answer

Automated data analysis

Answer

Reduced inventory holding costs

Question 32

When selecting a forecasting method, which factors are essential to consider?

Accepted Answer

Data availability, demand pattern, forecast horizon, and resource constraints.

Answer

Forecaster intuition

Answer

Company size

Question 33

What is the main purpose of safety stock in demand planning?

Accepted Answer

To buffer against demand and lead time fluctuations, reducing the risk of stockouts.

Answer

To reduce inventory carrying costs by keeping safety stock levels low.

Answer

To increase customer service levels by guaranteeing product availability.

Question 34

Which of the following is a common challenge in demand forecasting?

Accepted Answer

Dealing with seasonality, demand variability, and the influence of external factors.

Answer

Obtaining complete and accurate historical data.

Answer

Finding experienced and skilled forecasters.

Question 35

Why is it important to regularly evaluate and update demand forecasts?

Accepted Answer

To ensure forecasts remain accurate, responsive to changing market conditions, and support informed decision-making.

Answer

To meet regulatory compliance requirements.

Answer

To justify past investment decisions.

Question 36

Time series analysis assumes that:

Accepted Answer

Future demand patterns can be inferred from past demand data

Answer

Demand remains constant over time

Answer

Demand is inherently unpredictable and cannot be forecast

Question 37

What is a primary advantage of qualitative forecasting methods?

Accepted Answer

They can be useful when historical data is limited or for new products

Answer

They are more accurate than quantitative methods

Answer

They require less time and effort to implement

Question 38

The rolling average method of forecasting involves:

Accepted Answer

Calculating an average of the most recent demand data points

Answer

Using all historical demand data to calculate an average

Answer

Predicting future demand based on a hypothetical trend

Answer

Assigning greater weight to more recent data

Question 39

When demand exhibits distinct seasonal patterns, which forecasting technique is most appropriate?

Accepted Answer

Exponential smoothing with seasonality

Answer

Simple exponential smoothing

Answer

Double exponential smoothing

Answer

Linear regression

Question 40

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

Accepted Answer

Provide a buffer against unexpected fluctuations in demand or supply

Answer

Guarantee uninterrupted production

Answer

Reduce the overall cost of maintaining inventory

Question 41

Which of the following is a potential disadvantage of using material requirements planning (MRP)?

Accepted Answer

Its effectiveness depends on the accuracy of demand forecasts

Answer

It can lead to lower inventory levels

Answer

It can improve delivery performance

Answer

It simplifies production planning

Question 42

What is a key benefit of effective demand forecasting and planning?

Accepted Answer

Improved customer service and satisfaction through accurate fulfillment of demand

Answer

Increased production costs

Answer

Reduced flexibility in production scheduling

Answer

Higher inventory levels

Question 43

What is the main advantage of using a rolling forecast in demand planning?

Accepted Answer

It allows for continuous updates and adjustments based on the latest data.

Answer

It eliminates the need for periodic forecasting.

Answer

It reduces forecast errors over the long term.

Question 44

Which of the following factors is specifically considered in demand planning but not in demand forecasting?

Accepted Answer

Production capacity

Answer

Historical demand data

Answer

Customer preferences

Answer

Economic indicators

Question 45

What is the key benefit of involving multiple stakeholders in a collaborative demand planning process?

Accepted Answer

It fosters better communication, coordination, and information sharing across different departments.

Answer

It eliminates forecast bias.

Answer

It reduces forecast errors.

Question 46

Which forecasting technique involves breaking down demand into its individual components, such as trend, seasonality, and cyclical patterns?

Accepted Answer

Decomposition

Answer

Moving averages

Answer

Regression analysis

Answer

Exponential smoothing

Question 47

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

Accepted Answer

To mitigate the risk of stockouts due to unexpected demand spikes or supply disruptions.

Answer

To increase inventory turnover.

Answer

To reduce carrying costs.

Question 48

What is a key advantage of utilizing machine learning algorithms for demand forecasting?

Accepted Answer

Machine learning models can often achieve higher forecasting accuracy and automate the process.

Answer

Machine learning requires less data than traditional forecasting methods.

Answer

Machine learning eliminates human bias in forecasting.

Question 49

What is the fundamental goal of demand forecasting?

Accepted Answer

To provide an accurate estimate of future customer demand.

Answer

To identify trends and patterns in demand.

Answer

To optimize production schedules.

Question 50

Which of the following is a key assumption underlying the use of time series analysis for forecasting?

Accepted Answer

Past demand patterns are likely to persist into the future.

Answer

Demand is independent of external factors.

Answer

Forecast errors are random and unpredictable.

Question 51

What is the difference between demand smoothing and demand leveling?

Accepted Answer

Demand smoothing aims to remove random fluctuations in demand, while demand leveling addresses seasonal variations.

Answer

Demand smoothing uses historical data, while demand leveling relies on future forecasts.

Answer

Demand smoothing involves aggregating demand over time, while demand leveling focuses on individual data points.