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45 True/False questions

  1. Forecasting AccuracyForecast is the specific definition of what is projected to be sold, when and where

    Forecasting is a critical capability

    Many logistics and supply chain activities must be completed in anticipation of a sale

    Forecasting approaches to achieve:
    -enhanced service or reduced inventory

    Improve forecast accuracy
    Forecast at a higher level of aggregation

          

  2. Forecasts must be more timely and accurate to alignCustomer demands for higher service levels and more product variations with
    A management focus to reduce supply chain assets

          

  3. Trend Componentis long-range shift in periodic sales
    Positive, negative or neutral

          

  4. Logistics Forecasts are Necessary To...Support collaborative planning
    -Collaborative forecasts help avoid inventory
    excesses and out-of-stock situations
    Drive requirements planning to determine
    -Inventory projections
    -Replenishment requirements
    -Production requirements
    Improve resource management through cost trade-offs of strategies such as
    -Extra production capacity
    -Extra storage capacity

          

  5. Period demand equationDemand management system is the information technology component of the sales and operations planning (S&OP) process

    Demand management develops the forecasts used by other supply chain processes to anticipate sales levels

    Forecasts are then used to determine production and inventory requirements

    Must maintain forecast data consistency across multiple products and warehouse facilities

          

  6. Base Demandconsists of order generation, and order fulfillment.

          

  7. CPFR Process Steps1.)Develop a joint business plan
    2.)Create a joint calendar to determine product flow
    3.)Create a common sales forecast based on shared knowledge of each trading partner's plan
    -Share common forecast between retailer and
    suppliers
    -Use an iterative process to share the forecast and
    requirements plan
    4.)Use the common sales forecast to develop
    -Production plan
    -Replenishment plan
    -Shipment plan

          

  8. Irregular Componentis long-range shift in periodic sales
    Positive, negative or neutral

          

  9. Evaluating Applicability of Forecasting Techniquesrelies on expert opinion and special information
    Costly and time-consuming
    Ideal for situations with little historical data or when much managerial judgment are required
    Developed using surveys, panels and consensus meetings

          

  10. Forecast Challenges-A meaningful forecast process requires integrated and consistent combination of components

    Faulty communications are costly for supply chains
    -Seek to reduce forecast inconsistency across
    multiple members of the supply chain

    Efforts to perfect a single component do not overcome need for other components

    Process design should consider strengths and weaknesses of each individual component
    -Design for optimal performance of the overall
    integrated system

          

  11. Demand Planning - Potential Issues / Watch-OutsHistorical forecasts
    Promotional plans
    Pricing changes
    New product introductions

          

  12. Collaborative Planning, Forecasting and ReplenishmentOvercomes these problems resulting from individual perspectives

    Limited economies of scale
    Limited information sharing
    Excessive transportation expense

          

  13. Demand & Supply ManagementDemand management system is the information technology component of the sales and operations planning (S&OP) process

    Demand management develops the forecasts used by other supply chain processes to anticipate sales levels

    Forecasts are then used to determine production and inventory requirements

    Must maintain forecast data consistency across multiple products and warehouse facilities

          

  14. Forecast TechniquesMoving average -- weighted average previous period sales
    Exponential smoothing -- WEIGHTED MOVING AVERAGE using smoothing constraints
    Regression -- Time period as the independent variable
    Time series -- Other independent variables such as price, promotion plans
    Multivariate -- Complex statistical techniques

          

  15. Qualitative forecast techniquesuses specific information to develop relationships between lead events and forecasted activity
    e.g., simple or multiple regression

          

  16. Cyclic Componentis long-range shift in periodic sales
    Positive, negative or neutral

          

  17. Supply Chain PlanningPlan
    Source
    Make
    Deliver
    Return

          

  18. Analysis:consists of order generation, and order fulfillment.

          

  19. Basic planning formulaDemand management system is the information technology component of the sales and operations planning (S&OP) process

    Demand management develops the forecasts used by other supply chain processes to anticipate sales levels

    Forecasts are then used to determine production and inventory requirements

    Must maintain forecast data consistency across multiple products and warehouse facilities

          

  20. ForecastingForecast is the specific definition of what is projected to be sold, when and where

    Forecasting is a critical capability

    Many logistics and supply chain activities must be completed in anticipation of a sale

    Forecasting approaches to achieve:
    -enhanced service or reduced inventory

    Improve forecast accuracy
    Forecast at a higher level of aggregation

          

  21. Annual Business PlanningStrategic planning starts the process - 3-5 year horizon

    Integrated Operations Planning - Deliver the plan!
    Monitor, control, adjust for actual variance from plan

          

  22. 8 Keys to Successful S&OP ImplementationThese applications can be sourced from the following options
    -Custom developed for the organization
    -Packaged solutions contained in a larger supply chain management system
    -Modules within an ERP system

          

  23. Production planning systems matchProduction planning uses requirements from demand management to develop a realistic supply plan

    Must integrate with manufacturing (and 3rd party) resources and constraints

    -Requirements plan defines what items are needed and when

    -Effective planning creates a time-sequenced plan

          

  24. Execution:Forecast is the specific definition of what is projected to be sold, when and where

    Forecasting is a critical capability

    Many logistics and supply chain activities must be completed in anticipation of a sale

    Forecasting approaches to achieve:
    -enhanced service or reduced inventory

    Improve forecast accuracy
    Forecast at a higher level of aggregation

          

  25. Forecasting Requirements-Improving accuracy of forecasts requires error measurement followed by analysis
    -Choice of method for error measurement

    Simple average error can hide problems as positive errors are offset by negative ones
    Mean Absolute Deviation (MAD) evaluates absolute error by ignoring the sign of the error
    Mean Absolute Percentage Error (MAPE) is mean MAD divided by mean demand

          

  26. Forecast for time T-A meaningful forecast process requires integrated and consistent combination of components

    Faulty communications are costly for supply chains
    -Seek to reduce forecast inconsistency across
    multiple members of the supply chain

    Efforts to perfect a single component do not overcome need for other components

    Process design should consider strengths and weaknesses of each individual component
    -Design for optimal performance of the overall
    integrated system

          

  27. Production PlanningProduction planning uses requirements from demand management to develop a realistic supply plan

    Must integrate with manufacturing (and 3rd party) resources and constraints

    -Requirements plan defines what items are needed and when

    -Effective planning creates a time-sequenced plan

          

  28. Forecast Process-A meaningful forecast process requires integrated and consistent combination of components

    Faulty communications are costly for supply chains
    -Seek to reduce forecast inconsistency across
    multiple members of the supply chain

    Efforts to perfect a single component do not overcome need for other components

    Process design should consider strengths and weaknesses of each individual component
    -Design for optimal performance of the overall
    integrated system

          

  29. Demand management processes must integrate: consists of sales forecasting, order planning/forecasting, inventory positions, and transit lead times.

          

  30. Sourcing software applicationsThese applications can be sourced from the following options
    -Custom developed for the organization
    -Packaged solutions contained in a larger supply chain management system
    -Modules within an ERP system

          

  31. Logistics planning integrates overallmovement demand, vehicle availability, and relevant movement cost into a decision support system that seeks to minimize overall freight expense

    -Analysis suggests ways freight can be shifted among carriers or consolidated to lower expenses

          

  32. Benefits of Integrated Operations PlanningStrategic planning starts the process - 3-5 year horizon

    Integrated Operations Planning - Deliver the plan!
    Monitor, control, adjust for actual variance from plan

          

  33. Perod logistics requirements equationForecasts+Customer orders + promotions

          

  34. Benefits of CFPR - Five Major CategoriesImproved Customer Service Through Better Forecasting Techniques
    Lower Inventories for Higher Profits
    Improved ROI on Technology Investment
    Improved Relationships Between Trading Partners
    Cost Reduction

          

  35. Time series forecast techniquesfocuses entirely on historical patterns and pattern changes to generate forecasts
    "The past is a good predictor of the future"
    e.g., moving averages, exponential smoothing, extended smoothing, and adaptive smoothing

          

  36. Logistics Planning & Inventory Deploymentmovement demand, vehicle availability, and relevant movement cost into a decision support system that seeks to minimize overall freight expense

    -Analysis suggests ways freight can be shifted among carriers or consolidated to lower expenses

          

  37. Making S&OP Work in an Organization Requires Senior Leadership Involvement-Organizational processes
    -Personal responsibility and accountability
    -Information systems (financial, marketing and supply chain planning)

    Using this S&OP combination, the operations and sales groups must overcome conflicts to develop consensus and then execute their collaborative plans
    Finance also plays a key role in dollarizing the impact of decisions

          

  38. Sales & operations planning is an integrated combination of-Organizational processes
    -Personal responsibility and accountability
    -Information systems (financial, marketing and supply chain planning)

    Using this S&OP combination, the operations and sales groups must overcome conflicts to develop consensus and then execute their collaborative plans
    Finance also plays a key role in dollarizing the impact of decisions

          

  39. Demand PlanningProduction planning uses requirements from demand management to develop a realistic supply plan

    Must integrate with manufacturing (and 3rd party) resources and constraints

    -Requirements plan defines what items are needed and when

    -Effective planning creates a time-sequenced plan

          

  40. Strategy & Planning:establishes the ground rules for the collaborative relationship
    Business goals
    Scope of collaboration and assignment of roles
    Responsibilities
    Checkpoints / milestones
    Escalation procedures

          

  41. Promotional Componentis annual recurring upward or downward movement in demand
    e.g. Toy demand before Christmas

          

  42. Seasonal Componentis annual recurring upward or downward movement in demand
    e.g. Toy demand before Christmas

          

  43. Causal forecast techniquesuses specific information to develop relationships between lead events and forecasted activity
    e.g., simple or multiple regression

          

  44. Common software applications for most planning environments include:CFPR is a business model that takes a holistic approach to supply chain management and combines the intelligence of multiple trading partners in planning and fulfilling customer demand by using common metrics, language and firm agreements to improve efficiency for all participants.

    CFPR links sales and marketing best practices - category management, supply chain planning and execution processes to increase availability while reducing inventory, merchandizing, transportation, and logistics costs.

    Developed to reduce unplanned and uncoordinated events that distort the smooth flow of product throughout the supply chain (reduces bullwhip effect)

          

  45. Three Drivers of Effective Supply Chain Planning1.) Supply Chain Visibility
    2.)Exception management to respond to disruptions and minimize/prevent potential problems
    3.) Enables identification of trade-offs that can increase functional costs, but lower total system costs
    -Stay focused on the customer!