Chapter 7 Demand Management and Forecasting

These flashcards cover key concepts from the lecture notes on Demand Management, addressing essential definitions, techniques, and importance in the context of supply chain management.

What is the essence of demand management?

To estimate and manage customer demand and use this information to make operating decisions.

What is the desired end result of effective demand management?

Greater value for the end user or consumer.

What are common problems in demand management?

Lack of coordination between departments, overemphasis on forecasts, and non-strategic uses of demand information.

Why is demand management important?

It unifies channel members with common goals of satisfying customers and solving customer problems.

What are the two types of demand?

Independent demand and dependent demand.

What does independent demand refer to?

The demand for the primary item, known as base demand.

What is meant by dependent demand?

The demand directly influenced by demand for an independent item.

What are the three common forecasting techniques?

Simple moving average, weighted moving average, and exponential smoothing.

What is the formula for Mean Squared Error (MSE)?

MSE = ∑(error^2).

What does MAD stand for in forecasting?

Mean Absolute Deviation.

What is the purpose of Sales and Operations Planning (S&OP)?

To create a consistent operation plan that aligns with the company’s strategy.

What is the primary goal of Collaborative Planning, Forecasting, and Replenishment (CPFR)?

To agree on a single forecast for an item among trading partners.

What factors can affect demand fluctuations?

Random, trend, and seasonal fluctuations.

What does CFE stand for and what does it measure?

Cumulative Forecast Error; it measures the total forecast error for a set of data.

What is the objective of demand forecasting?

To set goals and develop execution strategies for marketing and operations.