Supply Chain Management, 5e (Chopra/Meindl) Chapter 7 Demand Forecasting in a Supply Chain
7.1 True/False Questions 1) The forecast of demand forms the basis for all strategic and planning decisions in a supply chain. Answer: T!" #iff: $ Topic: 7.1 The ole of Forecasting Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting $) Throughout the supply chain, all pull processes p rocesses are performed in anticipation of customer demand, whereas all push processes are performed in response to customer demand. Answer: FA%" #iff: 1 Topic: 7.1 The ole of Forecasting Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting -) For pull processes, a manager must forecast what customer demand will be in order to plan p lan the leel of aailable capacity c apacity and inentory. Answer: T!" #iff: $ Topic: 7.1 The ole of Forecasting Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting ) For push processes, a manager must forecast what customer demand will be in order to plan the leel of aailable capacity and inentory. Answer: FA%" #iff: Topic: 7.1 The ole of Forecasting Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting 0) The result when each stage in the supply chain ma(es its own separate forecast is often a match between supply and demand, because these forecasts are often ery different. Answer: FA%" #iff: $ Topic: 7.1 The ole of Forecasting Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting
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) 8hen all stages of a supply chain produce a collaboratie forecast, it tends to be much more accurate. Answer: T!" #iff: 1 Topic: 7.1 The ole of Forecasting Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting 7) eaders in many supply chains hae started moing toward collaboratie forecasting to improe their ability to match supply and demand. de mand. Answer: T!" #iff: $ Topic: 7.1 The ole of Forecasting Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting 9) ature products with stable demand are usually the most difficult to forecast. Answer: FA%" #iff: $ Topic: 7.1 The ole of Forecasting Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting ;) Forecasting and the accompanying managerial decisions are e
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1$) ongterm forecasts are usually more accurate than shortterm forecasts. Answer: FA%" #iff: $ Topic: 7.1 The ole of Forecasting in a %upply &hain earning *utcome: #escribe ma+or approaches to forecasting 1-) Aggregate forecasts are usually more accurate than disaggregate forecasts, as they tend to hae a smaller standard deiation of error relatie to the mean. Answer: T!" #iff: $ Topic: 7.1 The ole of Forecasting in a %upply &hain earning *utcome: #escribe ma+or approaches to forecasting 1) 5n general, the further up the supply chain a company is =or the further they are from the consumer), the smaller the distortion of information they receie. Answer: FA%" #iff: 1 Topic: 7.1 The ole of Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting 10) &ollaboratie forecasting based on sales to the end customer can help enterprises further up the supply chain reduce forecast error. Answer: T!" #iff: $ Topic: 7.1 The ole of Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting 1) Qualitatie forecasting methods are most appropriate when there is go od historical data aailable or when e
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19) Time series forecasting methods are the most difficult methods to implement. Answer: FA%" #iff: $ Topic: 7.- &omponents of a Forecast and Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting 1;) &ausal forecasting methods find a correlation between demand and enironmental factors and use estimates of what enironmental factors will be to forecast future demand. Answer: T!" #iff: $ Topic: 7.- &omponents of a Forecast and Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting $3) %imulation forecasting methods imitate the consumer choices that gie rise to demand to arrie at a forecast. Answer: T!" #iff: $ Topic: 7.- &omponents of a Forecast and Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting $1) The ob+ectie of forecasting is to filter out the random component =noise) and estimate the systematic component. Answer: T!" #iff: $ Topic: 7.- &omponents of a Forecast and Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting $$) The forecast error measures the difference between the forecast and the estimate. Answer: FA%" #iff: $ Topic: 7.- &omponents of a Forecast and Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting $-) The goal of any forecasting method is to predict the systematic component of demand and estimate the random component. Answer: T!" #iff: $ Topic: 7.0 Time%eries Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting $) A static method of forecasting assumes that the estimates of leel, trend, and seasonality within the systematic component ary as new demand is obsered. Answer: FA%" #iff: 1 Topic: 7.0 Time%eries Forecasting ethods AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting 7 &opyright 2 $31- 4earson "ducation, 5nc. publishing as 4rentice 6all
$0) 5n adaptie forecasting, the estimates of leel, trend, and seasonality are updated after each demand obseration. Answer: T!" #iff: $ Topic: 7.0 Time%eries Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting $) The moing aerage forecast method is used when demand has an obserable trend or seasonality. Answer: FA%" #iff: $ Topic: 7.0 Time%eries Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting $7) For pull processes, a manager must plan the leel of aailable capacity and inentory but not the actual amount to be e
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7.$ ultiple &hoice Questions 1) The basis for all strategic and planning decisions in a supply chain comes from A) the forecast of demand. ') sales targets. &) profitability pro+ections. #) production efficiency goals. ") all of the aboe Answer: A #iff: 1 Topic: 7.1 The ole of Forecasting in a %upply &hain earning *utcome: #escribe ma+or approaches to forecasting $) For push processes, a manager must forecast what customer demand will be in order to A) plan the serice leel. ') plan the leel of aailable capacity and inentory. &) plan the leel of productiity. #) plan the leel of production. ") none of the aboe Answer: # #iff: $ Topic: 7.1 The ole of Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting -) For pull processes, a manager must forecast what customer demand will be in order to A) plan the serice leel. ') plan the leel of aailable capacity and inentory. &) plan the leel of productiity. #) plan the leel of production. ") none of the aboe Answer: ' #iff: $ Topic: 7.1 The ole of Forecasting in a %upply &hain earning *utcome: #escribe ma+or approaches to forecasting ) The result of each stage in the supply chain ma(ing its own separate forecast is A) an accurate forecast. ') a more accurate forecast. &) a match between supply and demand. #) a mismatch between supply and demand. ") none of the aboe Answer: # #iff: $ Topic: 7.1 The ole of Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting 7 &opyright 2 $31- 4earson "ducation, 5nc. publishing as 4rentice 6all
0) 8hen all stages of a supply chain produce a collaboratie forecast, it tends to be A) much more detailed. ') much more comple<. &) much more accurate. #) much more fle
one of the aboe are true. Answer: ' #iff: $ Topic: 7.1 The ole of Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting 7) eaders in many supply chains hae started moing A) toward independent forecasting to improe their ability to match supply and demand. ') toward consecutie forecasting to improe their ability to match supply and demand. &) toward se?uential forecasting to improe their ability to match supply and demand. #) toward collaboratie forecasting to improe their ability to match supply and demand. ") >one of the aboe are true. Answer: # #iff: $ Topic: 7.1 The ole of Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting
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9) 4roduction can utili@e forecasts to ma(e decisions concerning A) scheduling. ') salesforce allocation. &) promotions. #) new product introduction. ") budgetary planning. Answer: A #iff: $ Topic: 7.1 The ole of Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting ;) ar(eting can utili@e forecasts to ma(e decisions conc erning A) scheduling. ') promotions. &) inentory control. #) aggregate planning. ") purchasing. Answer: ' #iff: 1 Topic: 7.1 The ole of Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting 13) Finance can utili@e forecasts to ma(e decisions concerning A) scheduling. ') promotions. &) plant/e?uipment inestment. #) aggregate planning. ") purchasing. Answer: A #iff: $ Topic: 7.1 The ole of Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting 11) 4ersonnel can utili@e forecasts to ma(e decisions concerning A) scheduling. ') promotions. &) plant/e?uipment inestment. #) wor(force planning. ") purchasing. Answer: ' #iff: $ Topic: 7.1 The ole of Forecasting in a %upply &hain AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting 79 &opyright 2 $31- 4earson "ducation, 5nc. publishing as 4rentice 6all
1$) ature products with stable demand A) are usually easiest to forecast. ') are usually hardest to forecast. &) cannot be forecast. #) do not need to be forecast. ") none of the aboe Answer: A #iff: 1 Topic: 7.1 The ole of Forecasting in a %upply &hain earning *utcome: #escribe ma+or approaches to forecasting 1-) 8hen either the supply of raw materials or the demand for the finished product is highly ariable, forecasting and the accompanying managerial decisions A) are e
1) *ne of the characteristics of forecasts is A) aggregate forecasts are usually more accurate than disaggregate forecasts. ') disaggregate forecasts are usually more accurate than aggregate forecasts. &) shortterm forecasts are usually less accurate than longterm forecasts. #) longterm forecasts are usually more accurate than shortterm forecasts. ") none of the aboe Answer: A #iff: $ Topic: 7.$ &haracteristics of Forecasts AA&%': eflectie Thin(ing %(ills earning *utcome: #escribe ma+or approaches to forecasting 17) Forecasts are always wrong and therefore A) should include both the e
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1;) Aggregate forecasts are usually more accurate than disaggregate forecasts because A) aggregate forecasts tend to hae a larger standard deiation of error relatie to the mean. ') aggregate forecasts tend to hae a smaller standard deiation of error relatie to the mean. &) disaggregate forecasts tend to hae a smaller standard deiation of error relatie to the mean. #) disaggregate forecasts tend to hae less standard de iation of error relatie to the mean. ") none of the aboe Answer: ' #iff: 1 Topic: 7.$ &haracteristics of Forecasts AA&%': eflectie Thin(ing %(ills earning *utcome: #escribe ma+or approaches to forecasting $3) 5n general, the further up the supply chain a company is =or the further they are from the consumer), A) the greater the distortion of information they receie. ') the smaller the distortion of information they receie. &) the information they receie is more accurate. #) the information they receie is more useful. ") none of the aboe Answer: A #iff: $ Topic: 7.$ &haracteristics of Forecasts AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting $1) 8hich of the following is not a forecasting method A) Qualitatie ') Time series &) &ausal #) %imulation ") All of the aboe are forecasting methods. Answer: " #iff: $ Topic: 7.- &omponents of a Forecast and Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting $$) Forecasting methods that are primarily sub+ectie and rely on human +udgment are (nown as A) ?ualitatie forecasting methods. ') time series forecasting methods. &) causal forecasting methods. #) simulation forecasting methods. ") none of the aboe Answer: A #iff: $ Topic: 7.- &omponents of a Forecast and Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting 711 &opyright 2 $31- 4earson "ducation, 5nc. publishing as 4rentice 6all
$-) Forecasting methods that use historical demand to ma(e a forecast are (nown as A) ?ualitatie forecasting methods. ') time series forecasting methods. &) causal forecasting methods. #) simulation forecasting methods. ") none of the aboe Answer: ' #iff: $ Topic: 7.- &omponents of a Forecast and Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting $) Forecasting methods that assume that the demand forecast is highly correlated with certain factors in the enironment =e.g., the state of the economy, interest rates, etc.) to ma(e a forecast are (nown as A) ?ualitatie forecasting methods. ') time series forecasting methods. &) causal forecasting methods. #) simulation forecasting methods. ") none of the aboe Answer: & #iff: $ Topic: 7.- &omponents of a Forecast and Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting $0) Forecasting methods that imitate the consumer choices that gie rise to demand to arrie at a forecast are (nown as A) ?ualitatie forecasting methods. ') time series forecasting methods. &) causal forecasting methods. #) simulation forecasting methods. ") none of the aboe Answer: # #iff: $ Topic: 7.- &omponents of a Forecast and Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting $) Qualitatie forecasting methods are most appropriate when A) there is good historical data aailable. ') there is little historical data aailable. &) e
$7) Time series forecasting methods are most appropriate when A) there is little historical data aailable. ') the basic demand pattern aries significantly from one year to the ne
-1) The multiplicatie form of the systematic component of demand is shown as A) leel B trend B seasonal factor. ') leel C trend C seasonal factor. &) =leel C trend) B seasonal factor. #) leel B =trend C seasonal factor). ") =leel B trend) C seasonal factor. Answer: A #iff: 1 Topic: 7.0 Time%eries Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting -$) The additie form of the systematic component of demand is shown as A) leel B trend B seasonal factor. ') leel C trend C seasonal factor. &) =leel C trend) B seasonal factor. #) leel B =trend C seasonal factor). ") =leel B trend) C seasonal factor. Answer: ' #iff: 1 Topic: 7.0 Time%eries Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting --) The mione of the aboe are steps. Answer: & #iff: $ Topic: 7.0 Time%eries Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting
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-0) A static method of forecasting A) assumes that the estimates of leel, trend, and seasonality within the systematic component do not ary as new demand is obsered. ') assumes that the estimates of leel, trend, and seasonality within the systematic component ary as new demand is obsered. &) the estimates of leel, trend, and seasonality are updated after each demand obseration. #) All of the aboe are true. ") >one of the aboe are true. Answer: A #iff: 1 Topic: 7.0 Time%eries Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting -) 5n adaptie forecasting A) there is an assumption that the estimates of leel, trend, and seasonality within the systematic component do not ary as new demand is obsered. ') the estimates of leel, trend, and seasonality within the systematic component are not ad+usted as new demand is obsered. &) the estimates of leel, trend, and seasonality are updated after each demand obseration. #) All of the aboe are true. ") >one of the aboe are true. Answer: & #iff: 1 Topic: 7.0 Time%eries Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting -7) The moing aerage forecast method is used when A) demand has obserable trend or seasonality. ') demand has no obserable trend or seasonality. &) demand has obserable trend and seasonality. #) demand has no obserable leel or seasonality. ") none of the aboe Answer: ' #iff: $ Topic: 7.0 Time%eries Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting
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-9) The simple e
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1) The measure of forecast error where the absolute amount of error of each forecast is aeraged is A) mean s?uared error =%"). ') mean absolute deiation =A#). &) mean absolute percentage error =A4"). #) bias. ") the trac(ing signal. Answer: ' #iff: $ Topic: 7. easures of Forecast "rror earning *utcome: #escribe ma+or approaches to forecasting $) The measure of forecast error where the aerage absolute error of each forecast is shown as a percentage of demand is A) mean s?uared error =%"). ') mean absolute deiation =A#). &) mean absolute percentage error =A4"). #) bias. ") the trac(ing signal. Answer: & #iff: Topic: 7. easures of Forecast "rror earning *utcome: #escribe ma+or approaches to forecasting -) The measure of whether a forecast method consistently oer or underestimates demand is A) mean s?uared error =%"). ') mean absolute deiation =A#). &) mean absolute percentage error =A4"). #) bias. ") the trac(ing signal. Answer: # #iff: $ Topic: 7. easures of Forecast "rror earning *utcome: #escribe ma+or approaches to forecasting ) The measure of how significantly a forecast method co nsistently oer or underestimates demand is A) mean s?uared error =%"). ') mean absolute deiation =A#). &) mean absolute percentage error =A4"). #) bias. ") the trac(ing signal. Answer: " #iff: Topic: 7. easures of Forecast "rror earning *utcome: #escribe ma+or approaches to forecasting
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0) forecasting methods assume that the demand forecast is highly correlated with certain factors in the enironment =the state of the economy, interest rates, etc.). A) Qualitatie ') Timeseries &) &ausal #) %imulation Answer: & #iff: $ Topic: 7.- &omponents of a Forecast and Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting ) forecasting methods are primarily sub+ectie and rely on human +udgment. A) Qualitatie ') Timeseries &) &ausal #) %imulation Answer: A #iff: $ Topic: 7.- &omponents of a Forecast and Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting 7) forecasting methods use historical demand to ma(e a forecast. A) Qualitatie ') Timeseries &) &ausal #) %imulation Answer: ' #iff: $ Topic: 7.- &omponents of a Forecast and Forecasting ethods earning *utcome: #escribe ma+or approaches to forecasting 9) 8ith respect to timeseries methods, the systematic component measures the e*T consist of A) leel. ') trend. &) seasonality. #) random component. Answer: # #iff: Topic: 7.- &omponents of a Forecast and Forecasting ethods AA&%': Analytic %(ills earning *utcome: #escribe ma+or approaches to forecasting
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;) The e?uation for calculating the systematic component may ta(e a ariety of forms. 8hich is not one of those forms listed in the te
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7.- "ssay Questions 1) "
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#iff: $ Topic: 7. 'asic Approach to #emand Forecasting AA&%': eflectie Thin(ing %(ills earning *utcome: #escribe ma+or approaches to forecasting 0) #iscuss (ey issues of forecasting in practice. Answer: Collaborate in building forecasts. C ollaboration with supply chain partners can often create a much more accurate forecast. 6oweer, most forecasts are still made not +ust within one company, but within one function in a company. 5t ta(es an inestment of time and effort to build the relationships with your partners to begin sharing information and creating collaboratie forecasts. The supply chain benefits of collaboration, howeer, are often an order o f magnitude greater than the cost. Te value of data depends on !ere you are in te supply cain. Although collaboration is a hot topic, this does not mean that reams and reams of data need to be shared across the supply chain. The alue of data depends on where one sits in the supply chain. To aoid being oerwhelmed with data when collaborating and not being able to sort out whatEs aluable, thin( about what data is aluable to each member of the supply chain and share only that data. "e sure to distinguis bet!een demand and sales. *ften, companies ma(e the mista(e of loo(ing at historical sales and assuming that this is what the historical demand was. To get true demand, ad+ustments need to be made for unmet demand due to stoc(outs, competitor actions, pricing, promotions, and so forth. 5n many cases, these ad+ustments are ?ualitatie in nature but are crucial to accurately reflect reality. Although it is not always easy, ma(ing an ad+ustment in a forecast to moe toward demand from +ust sales will increase accuracy and therefore supply chain performance. #iff: $ Topic: 7.11 Forecasting in 4ractice AA&%': eflectie Thin(ing %(ills earning *utcome: #escribe ma+or approaches to forecasting
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) Jien the following data for demand at the KLM &ompany, calculate the monthly forecast for $33- using a -month moing aerage. &alculate the A# and the trac(ing signal. 5s this a good forecast
Answer:
The standard deiation of the random element of demand is appro
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7) !sing data from the preious problem, calculate the monthly forecast for $33- using simple e
Answer:
The simple e
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9) 8ee(ly demand for pairs of pants at a 6ot Tropic store is as follows:
"stimate demand for the wee( 1- using a fourwee( moing aerage as well as simple e*T": For the simple e< ponential smoothing use the actual from the first period as the forecast for the first period.
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Answer:
The "
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