Demand Management and Forecasting Flashcards
6 cards from real CPIM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Demand Management and Forecasting flashcards as text
Which forecasting method uses the average of a specific number of the most recent historical periods?
Answer: Simple moving average
A simple moving average calculates the mean of the most recent N data points, dropping the oldest period as a new one is added.
What is 'exponential smoothing' and what is the smoothing constant (alpha) used for?
Answer: A forecasting method that weights recent data more heavily; alpha controls how quickly old data is discounted
Exponential smoothing weights recent observations more heavily than older ones, with a higher alpha giving more weight to the most recent data.
What does 'mean absolute deviation' (MAD) measure in forecasting?
Answer: The average absolute error between forecast and actual demand
MAD is the average of the absolute differences between forecast values and actual demand, used to measure forecast accuracy.
Which forecasting technique relies on expert opinion and consensus rather than historical data?
Answer: Delphi method
The Delphi method gathers and iteratively refines expert opinions until a consensus forecast is reached, useful when historical data is unavailable.
What is 'forecast bias' and why is it a concern?
Answer: A consistent tendency to over- or under-forecast, leading to systematic inventory or service errors
Forecast bias occurs when errors are consistently in one direction, causing systematic over- or understocking that does not self-correct.
What is a 'seasonal index' used for in demand forecasting?
Answer: To adjust historical demand data to account for predictable seasonal patterns
A seasonal index quantifies how much demand in a given period typically deviates from the average, used to deseasonalize data or forecast seasonal peaks.