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What are the four Ps?
- Product
- Price
- Promotion
- Place
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What are three important business processes that relate to demand management?
- marketing management
- CRM
- demand planning, such as forecasting and customer orders
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Why is proper demand management strategically important?
Because it facilitates the planning and use of resources throughout the supply chain.
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Customer relationship management helps by customers providing what 3 examples?
- design assistance
- customer needs
- information and communications
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What 4 things does order management enable as CRM activity?
- fast and accurate order entry and tracking
- meeting promised delivery dates and quantities
- handling customer inquiries and service complaints, returns and repair
- accurate and timely shipping documentation, invoicing, and recording of sales history
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What 2 forms does demand planning deal with Demand?
- forecasts
- management of orders
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what are 5 sources of demand?
- Forecasts
- Customer orders
- Replenishment orders from distribution centers
- Interplant transfers
- Other sources of demand
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What are 3 key influences on demand forecasting?
- Independent versus dependent demand
- Sources of Demand
- Demand patterns
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What are four basic demand patterns, or components?
- Trend
- Seasonal
- Random
- Cyclical
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What is forecasted in business planning.
Sales volume (4); new market and supply chain initiatives.
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What is forecasted in sales and operations planning?
Physical units of production at the product family level.
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What is forecasted in master scheduling?
Physical units of production at the end item level.
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Demand forecasts support planning at what three levels?
- business planning
- sales and operations planning
- master scheduling
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Why must every forecast include an estimate of error?
Because the error can be used to determine the level of safety stock.
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What benefit does shortened lead time have on forecasting?
Companies that shorten their production lead times can better react to short-term demand forecast data.
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What are the 3 principles of data collection and preparation?
- Record data in terms needed for the forecast
- Record circumstances relating to the data
- Record demand separately for different customer groups
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What are the 2 forecasting techniques?
Qualitative and Quantitative
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Qualitative forecasting is based on what?
Judgement
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Quantitative forecasting is based on what?
Mathematics
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What are the two types of leading indicators of extrinsic quantitative techniques?
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Qualitative techniques are good for what type of planning?
General business trends and medium- to long-range planning.
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What are extrinsic techniques based on?
The idea of correlation and cause and effect of outside data.
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What are 2 examples of intrinsic quantitative techniques?
- moving averages
- exponential smoothing
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When are moving averages best used?
When demand is stable, there is little trend or seasonality, and demand variations are random.
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What are 4 reasons to track the forecast?
- 1) understand why demand differs from the forecast
- 2) plan around error in the future
- 3) improve forecasting methods
- 4) to determine safety stock levels
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What are 2 types of forecasting error?
Bias and random variation.
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What are 3 actions to take and alternatives to consider for a biased forecast?
- 1) Investigate the cause of the error, such as sales promotions, large one-time orders, etc.
- 2) If necessary, adjust the demand history.
- 3) Change the monthly average forecast.
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What is mean absolute deviation? (MAD)
A simple and proven statistical approach to measuring and evaluating forecast error. MAD is used to determine the dispertion of the forecast error around average demand.
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Why are measurements such as MAD important?
Because they indicate the relative cost of different levels of customer service.
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