Deck 7: Demand Management

Question 1

A sales and operations planning process (S&OP) can produce a forecast internally that all functional areas agree upon and can execute.

Answer 1

True

Question 2

Exponential smoothing can use constants higher than 1, but not more than 5.

Answer 2

False

Question 3

This type of forecast error measure is the only one to show if a stock out or overage occurred:

A) MAD.
B) CFE (bias).
C) MAPE.
D) MSE.
E) none of these answers.

Answer 3

B

Question 4

The essence of demand management is to estimate and manage customer demand so that demand and supply are balanced to the point where there are zero stockouts and zero safety stocks.

Question 5

Demand management might be defined as focused efforts to estimate and manage customers' demand, with the intention of using this information to shape operating decisions.

Question 6

While there are four types of forecast error measures that can be used, none are foolproof.

Question 7

Dependent demand is directly influenced by independent demand.

Question 8

Outbound-to-customer logistics systems are also referred to as physical distribution.

Question 9

A weighted moving average assigns higher weights to more recent periods.

Question 10

Bias measures how accurate the forecast is compared to actual demand.

Question 11

Which of the following does a forecast always assume?

A) Base demand always moves in a positive direction
B) Business cycles do not exist
C) The past always repeats itself
D) Every forecast is seasonal

Question 12

Adjusting a forecast for seasons basically uses a combination of seasonal factors and average demand to arrive at an adjusted forecast.

Question 13

Materials management and physical supply are terms that cannot be used interchangeably.

Question 14

Mean Absolute Deviation (MAD) is a good metric of forecast accuracy because it shows whether a forecast is above or below actual demand.

Question 15

Demand management includes:

A) flows of products.
B) flows of services.
C) flows of capital.
D) all of these answers.

Question 16

Forecasting has become extremely accurate, especially since the development of the S&OP process.

Question 17

Collaborative planning, forecasting, and replenishment (CPFR) has not been considered to be a good process, as it excludes transportation.

Question 18

The term functional silos refers to:

A) product storage for physical supply.
B) the noncommunication between customers and vendors.
C) a technique to secure corporate marketing strategies.
D) lack of coordination between departments.

Question 19

Phantom demand is created by over-ordering during peak demand.

Question 20

External balancing methods involve managing production and inventory flexibility to help offset the imbalance of supply and demand.

Question 21

The internal balancing method deals with:
A) price and lead time.

A) functional silos.
B) inventory and production flexibility.
B) channel selection.

Question 22

There are at least three forecasting methods. Name them and choose one to discuss in more detail, including advantages and disadvantages.

Question 23

A process that organizations can use to arrive at a consensus forecast is called Sales and Operations Planning. Discuss the five steps used to implement this process.

Question 24

Exponential smoothing:

A) is one of the most commonly used techniques.
B) uses primarily weighted averages to compensate for errors.
C) is used to determine random variations.
D) is used to reduce channel fluctuations.

Question 25

There are four types of forecast error measures that can be used. Name them, and choose one to discuss.

Question 26

There are four strategies that firms can use to balance supply and demand; price, lead time, inventory, and _____.

A) transportation
B) warehousing
C) customer service
D) production flexibility
E) none of these answers

Question 27

The essence of demand management is to estimate and manage _____ and use this information to make operating decisions.

A) channel orders
B) vendors and suppliers
C) customer demand
D) SO&P processes

Question 28

What are the differences and similarities between outbound and inbound logistics systems? Which types of industries would place heavier emphasis on outbound systems? On inbound systems? Explain your choices.

Question 29

Four types of forecast error measures can be used. Which one of the following is not one of the four types?

A) Cumulative sum of forecast errors
B) Exponential smoothing for trends
C) Mean squared error
D) Mean absolute deviation

Question 30

What are some of the logistical problems that may arise when supply and demand for a product are not aligned properly? What are some of the methods used to soften the effects of this imbalance?

Question 31

What are the similarities between the CPFR and S&OP processes? What are the differences?

Question 32

One type of demand fluctuation is caused by random variation. What is random variation?

A) Errors in inventory management
B) Errors not caught by using exponential smoothing
C) A development that cannot normally be anticipated
D) Failure to properly execute the SO&P process plan

Question 33

The weighted moving average method assigns:

A) a value in each period being averaged.
B) a weight greater than 1.
C) information based on a simple average.
D) a weight to each previous period.

Question 34

There are two types of demand. What are they, and how do they influence the supply chain?