Demand Management and Forecasting: Key Concepts and Applications
Demand Management vs. Forecasting
The primary difference between demand management and forecasting: Demand management is proactive, while forecasting attempts to predict.
Economic Order Quantity (EOQ)
Alpha Company places 10 orders per year with its supplier. Each order is for an amount exactly equal to the EOQ: $500
Strategic Demand Planning
Strategic demand planning would best be utilized: To decide whether or not to close a manufacturing plant.
Forecasting Model Performance
Zanda Corp. has been testing the performance of two different forecasting models: RMSE of the two models.
Demand Characteristics
The demand for housing is characterized by a regular pattern of increasing to a peak, then falling. When the demand: Seasonality and cycles.
Trend Value in Data
What is the trend value (b) in the data: 5.6 units/period
Sales Forecasting Accuracy
Alpha Company sold 2,000 widgets yesterday. It had forecasted sales of 1,900 units. 1,960
Forecast Calculation
Assume that the forecast for the last period is FITt = 200 units, and recent experience suggests a likely sales increase of 10 units each period: 206
Component Demand
Jones Manufacturing Inc. purchases a component from a Chilean supplier. The demand for that component is exactly 70 units each day: $2,750
Exponential Smoothing
An office manager forecasts demand for office stationery by exponential smoothing, with alpha = 0.4: 10.8
Relationship Between Demand Management and Forecasting
What is the relationship between demand management and demand forecasting? Demand management plans are usually an input to demand forecasting
Forecasting Techniques
A forecasting technique that seeks inputs from people who: Grassroots forecasting.
Inventory Management
Johnson Company had beginning inventory of $1,000,000 and ending inventory of $1,200,000. $275,000
Cuadro Rojo
Cuadro rojo: 44
Inventory Turnover Rate
Next year a tire company wants to have an inventory turnover rate of 22 times per year. To achieve this turnover rate, what should be the average number of days of supply? 16.6
Reducing Total Costs
Which of the following might a company try to do to reduce the total: All of these
Order Cost
John Jones of Jones Corporation determined that the cost related to processing: order cost
Safety Stock
Safety stock exists for which of the following reasons? To provide protection against the uncertainties of supply and demand.
Periodic Review Inventory System
Which of the following statements is true regarding a periodic review inventory system? None of the selections are true
Days of Supply
If beginning inventory is $1,000,000, ending inventory is $1,400,000, sales are $10,000,000, and anticipated sales are $50,000 per day, what is the days of supply? 28 days.
Tracking Signal
The tracking signal will suggest to a manager that: A forecast mode’s parameters may need adjustment
Safety Stock Calculation
What is the safety stock that HighLife Corporation should carry for its desired service level of 95 percent? 149
Carrying Costs
Taxes and insurance costs are an example of which of the following costs? Carrying (or holding) costs
Target Service Level
You have a one-time opportunity to buy an item. It costs $20 and sells for $50. It has $4 salvage value if it does not sell. What is the target service level? 65.21 percent
Exponential Smoothing Forecast
Jones Company had sales of $100,000 last week. The company had forecasted that sales would be $120,000. Using exponential smoothing with a smoothing constant of 0.2, what is the forecast for this week’s sales: $116,000
Forecast Bias
In examining the data in Exhibit 12-5, the manager exclaimed that he was very happy to see no bias in the forecasts: I’m sorry, but there is a slight positive bias
Vendor-Managed Inventory (VMI)
Which of the following are NOT often associated with a vendor-managed inventory: Customers recommend to suppliers how they should schedule production
Total Annual Cost (TAC)
What is the TAC at $40/unit closest to? Desired service level = 95 percent: $362,325
Reorder Point (ROP) Calculation
When calculating a reorder point (ROP), which of the following factors WOULD NOT affect the calculation? Item’s EOQ
Order Placement and Delivery
Jasper’s Grocery places an order for Monster every 15 days. Once the order is placed, delivery to the store typically occurs in 3 days. 80 cases
Collaborative Planning
In recent years some companies have begun to work closely with their customers: Collaborative planning, forecasting, and replenishment