3 Demand Forecasting and Planning Free Online FlashCards

What does a demand forecast estimate?

A demand forecast estimates how much customers are likely to buy, where, and when; it informs decisions but does not guarantee future sales.

What does demand planning coordinate?

Demand planning coordinates forecasts with procurement, production, inventory, warehousing, and distribution plans.

How do level and trend demand patterns differ?

Level means demand fluctuates around a relatively steady average; trend means demand rises or falls over time.

What defines a seasonal demand pattern?

Seasonality is a recurring change in demand tied to the calendar, such as increased school-supply sales before a new school year.

What is cyclical variation in demand?

Cyclical variation is demand movement over longer periods, often associated with economic or industry conditions, without a fixed seasonal schedule.

What characterizes intermittent demand?

Intermittent demand has many periods with little or no demand, interrupted by occasional orders; it is common for spare parts.

When is qualitative forecasting especially useful?

Qualitative judgment draws on sales teams, customers, or experts. It is useful when historical data is limited, such as for a new product.

How does a naïve forecast work?

A naïve forecast uses a recent actual demand value as the next forecast, providing a simple benchmark.

What distinguishes exponential smoothing from a simple average?

Exponential smoothing uses past demand while giving more weight to recent observations. Some variants account for trend and seasonality.

What caution applies when interpreting a causal forecast model?

Causal models such as regression use potentially explanatory factors, including price or promotions, but a historical relationship does not by itself prove causation.

What is a key limitation of MAPE?

MAPE expresses error as a percentage, but it is undefined when actual demand is zero and can mislead when actual values are very small.

What is the three-month moving-average forecast for demands of 90, 105, and 111 units?

The forecast is $\frac{90+105+111}{3}=102$ units.