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Demand Forecasting and Inventory Management, Exams of Financial Management

A.T. Still University of Health Sciences (ATSU)Financial Management

Various topics related to demand forecasting and inventory management in supply chain operations. It discusses different types of demand patterns, forecasting methods, inventory holding costs, inventory management strategies, and the role of geographic information systems (gis) in supply chain decision-making. Insights into managing demand, reducing inventory levels, and optimizing supply chain processes. It covers key concepts such as seasonal demand, backorders, inventory pooling, forward placement, and supply chain complexity. The information presented could be useful for students and professionals interested in understanding the principles and practices of effective demand forecasting and inventory control in the context of supply chain management.

Typology: Exams

2024/2025

Available from 10/22/2024

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MGSC 395 Final Exam Concept Questions with Answers
1.A demand management option for a company is to even out the load on
resources by producing products, or services that have
similar resource requirements but different demand cycles.: A. Prescheduled
products
B. Promotional Products
C. Backlog products
***D. Complementary products
2.Generally, which of the following are to be avoided when managing de-
mand?: A. Promotional pricing
***B. Backorders
C. Quantity discounts
D. Perishable capacity
3.A repeatable pattern of increases or decreases in demand, depending
on periods of time of within one year or less, is a time-series
pattern ca:llAe.d Random
***B. Seasonal
C. Trend
D. Cyclical
4.The least predictable pattern of time-series variation is calle: d* *A. Random
B. Trend
C. Horizontal
D. Seasonal
5.Companies that use a two-tier forecasting system first cluster (or
"roll several similar services or products in a process called: A.
Combination
B. Demand grouping
C. Product clustering
***D. Aggregation
6.Which of the following statements regarding forecasting "units of measur
ment" is b e s:t?.A. "Dollars" is always the best initial forecasting unit of
measure- ment.
B. If accurately forecasting demand for a product is not possible in terms
of "number of units,"
forecasting should be avoided.
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MGSC 395 Final Exam Concept Questions with Answers

  1. A demand management option for a company is to even out the load on resources by producing products, or services that have similar resource requirements but different demand cycles.: A. Prescheduled products B. Promotional Products C. Backlog products ***D. Complementary products
  2. Generally, which of the following are to be avoided when managing de- mand?: A. Promotional pricing ***B. Backorders C. Quantity discounts D. Perishable capacity
  3. A repeatable pattern of increases or decreases in demand, depending on periods of time of within one year or less, is a time-series pattern c a:l l A e. d Random ***B. Seasonal C. Trend D. Cyclical
  4. The least predictable pattern of time-series variation is calle:d * *A. Random B. Trend C. Horizontal D. Seasonal
  5. Companies that use a two-tier forecasting system first cluster (or "roll several similar services or products in a process called: A. Combination B. Demand grouping C. Product clustering ***D. Aggregation
  6. Which of the following statements regarding forecasting "units of measur ment" is bes:t? .A. "Dollars" is always the best initial forecasting unit of measure- ment. B. If accurately forecasting demand for a product is not possible in terms of "number of units," forecasting should be avoided.

2 / ***C. Forecasted "product units" can be translated to dollars by multiplying them by the unit price.

4 / B. Whenever possible, forecast at the lowest level (greatest level of detail).

5 / C. The best way to improve forecast accuracy is to add additional terms to the forecast equation. D. Quantitative forecasts are better than qualitative forecasts.

  1. Judgment methods may be the only practical way to make a forecast when: ***A. there is no historical data due to a new product introduction. B. the forecast made in the previous period had a MAPE of less than 10%. C. quantitative models have been performing particularly well in recent periods. D. there is a great deal of historical product data.
  2. The of forecasting is a process of gaining consensus from a group of experts.: A. consulting method B. technological method C. salesforce estimate method ***D. Delphi method
  3. can also be used for forecasting the quick pace of techno- logical change.: A. "What-if" analysis B. Exponential smoothing C. Market research ***D. Executive opinion
  4. Judgment methods are LEAST likely to be indicated in which of the follow- ing situations:? A. The underlying product technology is in transition. ***B. Short-term forecasts are made for a product with stable demand. C. A new product is being introduced. D. The Delphi method is necessary.
  5. Combination forecasts produced by averaging independent forecasts

7 / C. should not be attempted when the individual forecasts bring different kinds of information into the forecasting process. ***D. has been suggested by research to produce more accurate forecasts than a single forecasting procedure.

  1. Which of the following statements is false:? A. In a make-to-order environ- ment, the forecasts tend to be for groups of products. B. In a make-to-stock environment, forecasts tend to be more detailed and can get down to specific individual products. C. If the lead time to buy raw materials is long, the forecasts go farther out into the future. ***D. All of the above statements are true.
  2. In step three of the forecasting process we try to achieve consensus of the forecast. One way to achieve that consensus in a formal way is to employ: A. consensus planning and forecasting (CPF). B. combination forecasting (CF). C. focus forecasting(FF). ***. collaborative planning, forecasting, and replenishment (CPFR).
  3. Which of the following is NOT a principle of the forecasting process:? A. Better processes yield better forecasts. B. The best way to improve forecast accuracy is to focus on reducing forecast error. C. Bias is the worst kind of forecast error. ***D. Whenever possible, forecast in detail at more disaggregated levels.
  4. Which of the following costs is NOT considered an inventory holding (or carrying) cos:t? ***A. inventory transportation costs B. inventory shrinkage costs

8 / C. inventory handling costs

10 /

  1. Lewis Machine Tools is considering reducing lot size to reduce cycle inventory. Which of the following is a change that should be made for lot size reduction to be effective:? ***A. Increasing repeatability B. Offer seasonal pricing plans C. Increase lead times D. Allowing backorders
  2. The primary lever to reduce anticipation inventory is to: A. improve demand forecasts so that fewer surprises come from customers. B. streamline the methods for placing orders and making setups. C. rely on more equipment and labor buffers. ***D. match demand rate with production rate.
  3. What is the primary lever to reduce cycle inventory:? A. improve demand forecasts ***B. reduce the lot sizes C. use flexible automation D. place orders closer to the time when they must be received
  4. Lisa's Card Cache uses ABC analysis. Which of the following statements is NOT true of ABC analysis:? A. Inventory items are ranked on the basis of dollar usage. B. ABC analysis uses the Pareto chart concept. ***C. ABC analysis allows the company to control inventory shrinkage. D. Generally, the Class A items account for approximately 80 percent of the dollar usage.
  5. An individual item or product that has an identifying code and is held in inventory somewhere along the supply chain is called a: A. MRO. B. stockable unit.

11 / C. inventory item. ***D. stock-keeping unit.

  1. The production demand for widgets for a 250-workday year is 7,500 uni Ordering costs are $25.00 per order and holding costs are $9.00 per unit p year. Four days must be allowed between order placement and order receipt. What is the EOQ, assuming known and constant variabl:e A s.? 73 B. 616 C. 0. ***D. 204
  2. Organizations have traditionally divided the responsibility for managing the flow of materials and services among which three departments:? ***A. Purchasing, production, distribution B. Purchasing, accounting, marketing C. Marketing, production, finance D. Purchasing, marketing, accounting
  3. Which functions are not part of distribution:? A. Taking inventory of finished goods ***B. Taking inventory of raw materials C. Transportation of products D. Flow from firm to customer
  4. A firm has the least amount of control over external causes of supply-chain dynamics. External causes include: ***A. expected changes in customer demand. B. information (e.g., demand forecast) errors. C. engineering changes to the product. D. product promotions
  5. A disadvantage of centralized placement is: A. reduction in inventory. ***B. increased cost of shipping small quantities directly to distant customers.

13 / D. reduction in safety stock.

  1. For the manufacturing firm, tier 2 suppliers provide wi components.: A. distribution centers B. the manufacturing firm's competitors C. tier 3 suppliers ***D. tier 1 suppliers
  2. Companies that engineer products to customer specifications normally do not have as part of their supply chain:s A.. raw material consignment warehouses ***B. distribution centers C. tier 1 suppliers D. customers
  3. What percentage of total income from sales does the typical service provider spend on purchased services and materials:? A. 90 to 100 percent B. 60 to 70 percent C. 0 to 10 percent ***D. 30 to 40 percent
  4. A fundamental purpose of supply chain design for manufacturers is to: A. minimize the amount of the material it must purchase. B. eliminate the need to manage raw materials. C. support the essential elements of the various services it delivers. ***D. control inventory by managing the flow of materials.
  5. Efficient supply chains are used by firms that: A. must serve demand that is unpredictable. ***B. have a competitive priority of consistent quality. C. have frequent new-service/product introductions.

14 / D. have high product variety.

  1. What is the one popular design for efficient supply chains:? A. make- to-or- der (MTO) B. assemble-to-order (ATO) C. design-to-order (DTO) ***D. make-to-stock (MTS)
  2. A design feature for responsive supply chains include firms: ***A. that have high capacity cushions. B. for which inventory investment is low enabling high inventory turns. C. for which supplier selection emphasizes low prices and consistent quality. D. that have an operation strategy that emphasizes high volumes.
  3. Firms that design and build products entirely to the customer's specifi- cations tend to use which of the following supply chain designs:? A. assem- ble-to-order (ATO) B. make-to-order (MTO) ***C. design-to-order (DTO) D. make-to-stock (MTS)
  4. A mass customization strategy has three important competitive advan- tages. Which of the following is NOT one of them:? A. managing customer relationships ***B. eliminate raw material inventories C. increasing perceived value of services or products D. eliminating finished goods inventory
  5. The firm that allows customers to select from a variety of standard options to create the service or product of their choice is practicing: ***A.

16 / B. postponement. C. channel assembly. D. None of the above.

  1. A process called is where members of the distribution channel act as if they were assembly stations in the factory.: A. postponement ***B. channel assembly C. mass customization D. modular design
  2. An order placement process software system which gives customers easy access to data relevant to the options available for a product is called: A. an order generator. ***B. a configurator. C. a channel assembler. D. a mass customizer.
  3. Geography and distance are less relevant in manufacturing-location deci- sions except when which of the following is in u s e:? A. Overnight delivery B. CAD/CAM C. Video conferencing ***D. Just-in-time systems
  4. Which of the following factors is NOT a determinant of a favorable labor climate?: A. Level of worker productivity ***B. Availability of good schools C. Cost of labor D. Worker transportation infrastructure
  5. Dominant factors in manufacturing include all of the following EXCEPT: A. favorable labor climate. ***B. location of competitors. C. proximity to parent company facilities. D. quality of life and proximity to suppliers.
  6. The concept of critical mass is associated with which of the following service location factors:? ***A. Location of competitors

17 / B. Site visibility

19 / placement B. Forward placement

20 / C. Warehousing D. Direct ship

  1. Which of the following is an advantage of forward inventory placemen:t?- ***A. faster delivery times B. lower inventory costs C. reduced safety stocks D. lower physical facility costs
  2. A reduction in inventory and safety stock because of the merging of uncertain and variable demands from the customers is called: ***A. inventory pooling. B. forward placement. C. distribution synergy. D. None of the above.
  3. Which of the following would not be considered a qualitative location selection factor:? A. community attitudes B. environmental factors ***C. annual transportation costs D. quality of life
  4. When quantifiable costs and other measures, as well as various qualitative factors, must be considered as parts of a complete evaluation, which tool is most usefu:l? A. the transportation method ***B. preference matrix C. break-even analysis D. the load-distance method
  5. The the supply chain, the less predictable the likelihood and