Chapter 2 Supply Chain

Demand Planning

The process of combining statistical forecasting techniques and judgment to construct demand estimates for products or services is known as?

False

Collaborative Planning, Forecasting, and Replenishment is the process of combining statistical forecasting techniques and judgment to construct demand estimates for products or services.

False

Dependent Demand is demand for an item that is unrelated to the demand for other items, such as a finished product, a spare part, or a service part. 

False

Dependent demand items are generally forecasted based on market conditions and/or historical sales and usage data.

False

Historical Analogy is a quantitative method of forecasting.

False

For every forecasting problem, there is one best forecasting technique.

Seasonal Variation

Which type of forecast variation involves a pattern of variation within one year that can be repeated from year-to-year? Typically has some period of considerably higher demand.

Forecasting

developed through data analysis and judgment

Demand Planning

which is the process of combining statistical forecasting techniques and/ or judgement to construct demand estimates for products or services

Demand

the need for a particular product/component

Independent Demand

is demand for an item that is unrelated to the demand for other items such as a finished product,, a spare part, or service part (forecasted)

Dependent Demand

is demand for an item that is directly related to other items or finished products such as component or material used in making a finished product (calculated)

Forecasting

is the business function that estimates future demand for products so that they can be purchased or manufactured in appropriate quantities in advance of need

The goal of forecasting and demand planning process is to ___.

minimize forecast error

Qualitative forecasting

opinion and intuition; when data are limited, unavailable, or not currently relevant

Quantitative forecasting

mathematical and historical data to make forecasts

Jury of Executive Opinion

people who know the most about the product and the marketplace would likely form a jury to discuss and determine the forecast, panel consists of series of forecasting meetings until they come to an agreement

Delphi Metod

same as Jury of Executive Opinion expect they collect data separately of the participants so they are not influenced by one another.

Historical Analogy

a judgmental forecasting technique based on identifying sales history that is comparable to a present situation such as the sales history of a similar product

Customer Survey

Customers are directly approached and asked to give their opinion about the particular product

Time Series

A quantitative forecasting technique used to historical data to predict the future demand

Trend Variations

movement of a variable over time

Random Variations

instability in the data caused by random occurrences (abnormal demand)

Seasonal Variations

pattern of variation within one single year

Cyclical Variations

wavelike pattern that last longer than 1 year can extend over multiple years

Naive Forecasting

sets the demand for the next time period to be exactly the same as the demand in the last time period

Regression

uses the historical relationship between an independent and a dependent variable to predict the future values of the dependent variable

Simple Linear Regression

model the relationship between a two or more independent variable and dependent variable by fitting a linear equation to the observed data

Multiple Linear Regression

Fill in later

Forecast Bias

a consistent deviation from the mean in one direction; either high or low

Running Sum of Forecast Errors

provides a measure of forecast bias. indicates the tendency of a forecast to be consistently higher or lower than the demand

Bullwhip Effect

a supply chain phenomenon where orders to suppliers tend to have a larger variability than sales to buyers, which results in an amplified demand variability upstream.

Collaborative Planning, Forecasting, and Replenishment

is a business practice that combines the intelligence of multiple trading partners who share their plans, forecasts, and delivery schedules with one another in an effort to ensure a smooth flow of goods and service across a supply chain.