3 Demand Planning and Forecasting Free Online FlashCards

What is a demand forecast?

A forecast is an informed estimate of likely customer purchases, not a promise or a target.

What does a demand trend describe?

Trend is a sustained increase or decrease in demand over time.

Why can POS sales misrepresent consumer demand?

Point-of-sale sales are closer to consumer purchases than retailer shipments, but sales can understate true demand when an item is out of stock.

How does moving-average window length affect a forecast?

A short window responds quickly but is more sensitive to random variation; a longer window is smoother but reacts more slowly.

What is rolling-origin evaluation?

Rolling-origin evaluation repeatedly trains on earlier periods and tests forecasts on later periods.

What is Collaborative Planning, Forecasting, and Replenishment (CPFR)?

CPFR is a process in which supply-chain partners share plans and demand information, agree on forecasts where appropriate, and coordinate replenishment.

What four activities make up demand management?

Demand management plans and communicates demand, influences it where appropriate, and prioritizes it when supply is limited.

What is seasonality in demand?

Seasonality is a demand pattern that repeats at a known interval, such as higher sales on weekends or annual winter clothing demand.

How does Croston’s method address intermittent demand?

Croston’s method separately smooths the size of nonzero demands and the time between them, then combines those estimates.

How does exponential smoothing weight past demand?

Exponential smoothing gives greater weight to recent observations, while older observations receive progressively less weight.

What should planners check before using a predictor in a causal forecast?

A predictor must be available or itself forecast for the period ahead. Correlation alone does not establish that it causes demand.

What does a positive signed forecast error indicate?

With signed error defined as $e_t=A_t-F_t$, a positive error means the forecast was too low.