Business And FinanceSupply Chain Chapter 2
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Supply Chain Chapter 2

Catalina Bailey avatar Catalina Bailey
2 October 2022
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31 test answers

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Forecast
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an estimate of future demand
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Forecasting
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the business function that estimates future demand for products so that they can be purchased or manufactured in appropriate quantities in advance of need
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Demand
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the need for a particular product or component
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Demand Planning
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the process of combining statistical forecasting techniques and judgement to construct demand estimates for products or services
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Independent Demand
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demand for an item that is unrelated to the demand for other items, such as finished product, a spare part, or a service part
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Dependent Demand
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demand for an item that is directly related to other items or finished products, such as a components or material used in making a finished product
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What are the two basic forecasting techniques?
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Qualitative and Quantitative
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Qualitative Forecasting
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Forecasting which is based on opinion and intuition
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What are the five qualitative forecasting models?
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Personal insight, Jury of executive opinion, delphi method, sales force estimation, and customer survey
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Personal Insight
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forecast is based on the inside of the most experienced, most knowledgeable, or most senior person available
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Jury of executive opinion
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forecast from people who know the most about the product and the marketplace that would likely form a jury to discuss and determine the demand
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Delphi Method
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forecast where the input of each of the participants is collected separately so that people are not influenced by one another
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Sales force estimation
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forecast performed specifically with a group of salespeople
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Customer survey
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forecast where customers are directly approached and asked to give their opinions about the particular product
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Quantitative Forecasting
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forecasting which uses mathematical models and historical data to make forecasts
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What are the types of quantitative forecasting?
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Time Series and Cause and effect
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Time Series
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based on the assumption that the future is an extension of the past. Historical data is used to predict future demand ( most frequently used amount all the forecasting models)
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Cause and Effect
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assumes that one or more factors predict future demand
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Five models of Time Series
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Naive forecasting, simple moving average forecasting, weighted moving average, exponential smoothing, and linear trend
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Two models of Cause and Effect
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Simple regression and multiple regression
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Mean absolute deviation (MAD)
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measures the size of the forecast error in units. It is calculated as the average of the unsigned, i.e., absolute, errors over a specified period of time. MAD = ∑(|A - F|) / n
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Mean Absolute Percent Error (MAPE)
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measures the size of the error in percentage terms. It is calculated as the average of the unsigned percentage error. MAPE = ∑ ((|A - F|)/ A) / n
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Mean Squared Error (MSE)
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magnifies the errors by squaring each one before adding them up and dividing by the number of forecast periods. MSE = ∑ (A-F) ² / n
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The Qualitative forecasting method is based on opinion & intuition A. True B. False
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A. True
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Forecasts are more accurate the farther out into the future that you forecast. A. True B. False
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B. False
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Cause-and-Effect Models can have multiple independent variables. A. True B. False
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A. True
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Independent Demand is demand for an item that is directly related to other items or finished products, such as a component or material used in making a finished product. A. True B. False
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B. False
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What does the acronym CPFR represent? a. Coordinated Planning & Forecasting Relationships b. Collaborative Planning, Forecasting, & Replenishment c. Centralized Purchasing & Forecasting Relationships d. Collaborative Purchasing, Forecasting, & Receivables
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b. Collaborative Planning, Forecasting, & Replenishment
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Which one of the following is NOT a type of qualitative forecasting? a. Sales force composite b. Consumer survey c. Jury of executive opinion d. Naïve method
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D. naive method
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In the absence of any other information or visibility, individual supply chain participants can begin second-guessing what is happening with ordering patterns, and potentially start over-reacting. This is know as? a. Forecast Bias b. The Bullwhip Effect c. A Tracking Signal d. The Running Sum of Forecast Errors
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B. The Bullwhip Effect
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When creating a quantitative forecast, data should be evaluated to detect for a repeating pattern of demand from year to year, or over some other time interval, with some periods of considerably higher demand than others. This is known as a? a. Trend Variation b. Random Variation c. Seasonal Variation d. Cyclical Variation
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C. Seasonal Variation