Exam 4: Sales Forecasting and Inventory Management

One reason to hold inventory is the transportation economies of scale. Here, due to the tapering principle more inventory on a truck costs more per unit, thereby creating economies of scale.

Which of the following methods is not a quantitative forecasting method?

Firms often consolidate shipments to save transportation cost, which results in higher inventory because inventory needs to accumulate before shipment. What is the goal of firms that do this?

Which of the following is a potential problem that can arise when using a Consensus Panel for sales forecasting?

Time horizon and level of aggregation impact the level of forecast error.

What is Inventory Carrying Cost?

What is your economic order quantity if your annual demand is 100 units, the order placement cost is $25, and the holding cost per unit per year is $50?

Sales & Operations Planning (S&OP) uses only qualitative methods to construct a sales forecast.

AT&T is selling a new iPhone, which is in high demand. Unfortunately, they run out of the phones quickly; this is because they are not managing their inventory effectively.

Collaborative Planning, Forecasting, & Replenishment (CPFR) models include four primary activities. What are those activities?

Forecasting methods may be divided into two basic categories: direct and indirect.

Which of the following is NOT a symptom of poor inventory management?

It is not feasible to manage supply chains without a sales forecast.

Which one of the following situations is an example of a reason to hold/increase inventory?

What constitutes inventory carrying cost in an EOQ model?

It is possible to avoid making forecasting errors by working more closely with suppliers and customers to build internal integration.

One reason to hold inventory is to maintain a source of supply, such as when a small set of suppliers provide specialized or difficult to find products.

Which of the following forecasting methods includes both qualitative and quantitative tools.

A variation of the Consensus Panel method where experts work independently and anonymously, is called:

During the hurricane season Lowe's and Home Depot shift inventory (plywood, generators, etc.) between stores based on storm predictions. This is a symptom of poor inventory management.