Demand Planning & Forecasting Flashcards

Which forecasting method uses the average of a fixed number of most recent periods to predict future demand?

Answer: Simple moving average

A simple moving average calculates the mean of the most recent n periods, dropping the oldest data point each time a new period is added.

Exponential smoothing forecasting gives more weight to:

Answer: Recent demand observations compared to older ones

Exponential smoothing applies a smoothing factor (alpha) that causes recent observations to have exponentially greater influence on the forecast than older data.

Mean Absolute Deviation (MAD) measures forecast accuracy by calculating the:

Answer: Average of absolute differences between actual and forecasted demand

MAD averages the absolute values of forecast errors over a period, providing a unit-based measure of typical forecast deviation.

Which component of a demand time series represents consistent upward or downward movement over time?

Answer: Trend

Trend is the long-term directional movement in a data series, distinct from short-term seasonal or cyclical fluctuations.

A demand signal from a retail point-of-sale system fed directly to suppliers to trigger replenishment is an example of:

Answer: Demand-driven replenishment

Demand-driven replenishment uses actual consumption signals at the point of sale to pull inventory through the supply chain, reducing bullwhip effect.

The Bullwhip Effect in supply chains describes how small changes in end-customer demand lead to:

Answer: Progressively larger demand fluctuations as orders move upstream in the supply chain

The Bullwhip Effect amplifies demand variability as each tier adds safety stock buffers, causing upstream manufacturers to experience extreme swings from small retail changes.