# Supply Chain Chapter 2

## Unlock all answers in this set

question
Forecast
an estimate of future demand
question
Forecasting
the business function that estimates future demand for products so that they can be purchased or manufactured in appropriate quantities in advance of need
question
Demand
the need for a particular product or component
question
Demand Planning
the process of combining statistical forecasting techniques and judgement to construct demand estimates for products or services
question
Independent Demand
demand for an item that is unrelated to the demand for other items, such as finished product, a spare part, or a service part
question
Dependent Demand
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
question
What are the two basic forecasting techniques?
Qualitative and Quantitative
question
Qualitative Forecasting
Forecasting which is based on opinion and intuition
question
What are the five qualitative forecasting models?
Personal insight, Jury of executive opinion, delphi method, sales force estimation, and customer survey
question
Personal Insight
forecast is based on the inside of the most experienced, most knowledgeable, or most senior person available
question
Jury of executive opinion
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
question
Delphi Method
forecast where the input of each of the participants is collected separately so that people are not influenced by one another
question
Sales force estimation
forecast performed specifically with a group of salespeople
question
Customer survey
forecast where customers are directly approached and asked to give their opinions about the particular product
question
Quantitative Forecasting
forecasting which uses mathematical models and historical data to make forecasts
question
What are the types of quantitative forecasting?
Time Series and Cause and effect
question
Time Series
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)
question
Cause and Effect
assumes that one or more factors predict future demand
question
Five models of Time Series
Naive forecasting, simple moving average forecasting, weighted moving average, exponential smoothing, and linear trend
question
Two models of Cause and Effect
Simple regression and multiple regression
question
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 = β(|A - F|) / n
question
Mean Absolute Percent Error (MAPE)
measures the size of the error in percentage terms. It is calculated as the average of the unsigned percentage error. MAPE = β ((|A - F|)/ A) / n
question
Mean Squared Error (MSE)
magnifies the errors by squaring each one before adding them up and dividing by the number of forecast periods. MSE = β (A-F) Β² / n
question
The Qualitative forecasting method is based on opinion & intuition A. True B. False
A. True
question
Forecasts are more accurate the farther out into the future that you forecast. A. True B. False
B. False
question
Cause-and-Effect Models can have multiple independent variables. A. True B. False
A. True
question
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
B. False
question
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