CPIM - Master Planning of Resources
Principles of Demand Management - answer How to plan and use resources with
profitable business results
Planning Hierarchy
Customer/Supplier Objectives
Demand Planning Process
Demand Management Activities
Manufacturing Process Types and Environments
How Forecasts are Created and Used
Data Reliability
Linkage between organization's strategic/business plans and master planning of
resources - answerInformation from MPR will continually feed up to the strategic
management of resources done by senior management and will be used to improve and
refine manufacturing processes over time.
Functions and Components of the manufacturing planning hierarchy - Demand
Management - answerDemand Management - The function of recognizing all demands
for goods and services to support the marketplace.
Functions and Components of the manufacturing planning hierarchy - Distribution
Planning - answerDistribution Planning - The planning activities associated with
transportation, warehousing, inventory levels, materials handling, order administration,
etc. to support distribution.
Functions and Components of the manufacturing planning hierarchy - Sales and
Operations Planning - answerSales and Operations Planning - A process to develop
tactical plans that provide management the ability to strategically direct its businesses to
achieve competitive advantage. Brings together all plans into one integrated set of
plans.
Functions and Components of the manufacturing planning hierarchy - Resource
Planning - answerResource Planning - Capacity planning conducted at the business
plan level. The process of establishing, measuring, and adjusting limits or levels of long-
range capacity. Requires top management approval
,Functions and Components of the manufacturing planning hierarchy - Master
Scheduling - answerMaster Scheduling - The process where the master schedule is
generated and reviewed and adjustments are made to the master production schedule
to ensure consistency with the production plan. The master production schedule (the
line on the grid) is the primary input to the material requirements plan. The sum of the
master production schedules for the items within the product family must equal the
production plan for that family.
Functions and Components of the manufacturing planning hierarchy - Rough-cut
Capacity Planning - answerRough-cut Capacity Planning - The process of converting
the master production schedule into requirements for key resources often including
labor, machinery, warehouse space, suppliers' capabilities, and, in some cases, money.
Key Forecasting Concepts - answerForecast must match the nature of the decision
The forecast model selected should not be any more complicated than necessary.
Simpler is better.
Data put in, and the forecast that comes out, should be monitored on a routine basis for
appropriateness and quality.
Criteria used in selection of forecasting method - answerComplete versus incomplete
data. If all the required sales data for a particular item as well as the causal variables
are available, then the data are considered complete. Incomplete data would have
limited—or even an absence of—sales data for a particular product or not have the
causal variables identified.
Stable versus unstable data. Stable data have a distinct pattern such as seasonality or
trends. There's a randomness and no distinct pattern to unstable data.
Qualitative Forecasting - answerAn approach to forecasting that is based on intuitive or
judgmental evaluation. It is used generally when data is scarce, not available, or no
longer relevant.
Quantitative Forecasting - answerAn approach to forecasting where historical demand
data is used to project future demand. Extrinsic and intrinsic techniques are typically
used.
How to Evaluate forecast performance - answerMeasure forecast error - the difference
between actual demand and forecast demand, stated as an absolute value or as a
percentage.
Forecast Error - answerAbsolute Value
|A-F|
, A = Actual demand
F = Forecast demand
Mean Absolute Deviation (MAD) - answerSum |A-F|/Number of Periods
Mean Squared Error (MSE) - answerSum of (Errors for each Period)^2/Number of
forecast periods
Mean Absolute Percent Error (MAPE) - answerForecast Error as a Percentage/number
of periods
Bias - answerSum of (Actual Demand - Forecast Demand)/number of periods
Tracking Signal - answerAlgebraic Sum of Forecast Errors/MAD
Standard Deviation - answerSquare Root (Sum of Actual-Avg Forecast)/n-1
Forecast Accuracy - answerSum of Number of Hits/Sum of Number of Hits + Number of
misses * 100%
How collaborative planning, forecasting, and replenishment (CPFR) improves forecast
accuracy - answerA collaboration process whereby supply chain trading partners can
jointly plan key supply chain activities from production and delivery of raw materials to
production and delivery of final products to end customers.
CPFR can significantly enhance communications between suppliers and customers to
better forecast product demand.
How to maintain and optimize positive customer relationships using CRM practices -
answerFocus on putting the customer first.
Customer Segmentation - Practice of dividing a customer base into groups of
individuals who are similar in specific ways relevant to marketing.
Customer Service Life Cycle - A model that describes the customer relationship as
having four phases: requirements, acquisition, ownership, and retirement.
Forecast Consumption - Consuming the forecast as a result of order entry.
Techniques for measuring order delivery performance - answerReliability - This attribute
category focuses on quality of product and service. Number of perfect orders/total
number of orders
Principles of Demand Management - answer How to plan and use resources with
profitable business results
Planning Hierarchy
Customer/Supplier Objectives
Demand Planning Process
Demand Management Activities
Manufacturing Process Types and Environments
How Forecasts are Created and Used
Data Reliability
Linkage between organization's strategic/business plans and master planning of
resources - answerInformation from MPR will continually feed up to the strategic
management of resources done by senior management and will be used to improve and
refine manufacturing processes over time.
Functions and Components of the manufacturing planning hierarchy - Demand
Management - answerDemand Management - The function of recognizing all demands
for goods and services to support the marketplace.
Functions and Components of the manufacturing planning hierarchy - Distribution
Planning - answerDistribution Planning - The planning activities associated with
transportation, warehousing, inventory levels, materials handling, order administration,
etc. to support distribution.
Functions and Components of the manufacturing planning hierarchy - Sales and
Operations Planning - answerSales and Operations Planning - A process to develop
tactical plans that provide management the ability to strategically direct its businesses to
achieve competitive advantage. Brings together all plans into one integrated set of
plans.
Functions and Components of the manufacturing planning hierarchy - Resource
Planning - answerResource Planning - Capacity planning conducted at the business
plan level. The process of establishing, measuring, and adjusting limits or levels of long-
range capacity. Requires top management approval
,Functions and Components of the manufacturing planning hierarchy - Master
Scheduling - answerMaster Scheduling - The process where the master schedule is
generated and reviewed and adjustments are made to the master production schedule
to ensure consistency with the production plan. The master production schedule (the
line on the grid) is the primary input to the material requirements plan. The sum of the
master production schedules for the items within the product family must equal the
production plan for that family.
Functions and Components of the manufacturing planning hierarchy - Rough-cut
Capacity Planning - answerRough-cut Capacity Planning - The process of converting
the master production schedule into requirements for key resources often including
labor, machinery, warehouse space, suppliers' capabilities, and, in some cases, money.
Key Forecasting Concepts - answerForecast must match the nature of the decision
The forecast model selected should not be any more complicated than necessary.
Simpler is better.
Data put in, and the forecast that comes out, should be monitored on a routine basis for
appropriateness and quality.
Criteria used in selection of forecasting method - answerComplete versus incomplete
data. If all the required sales data for a particular item as well as the causal variables
are available, then the data are considered complete. Incomplete data would have
limited—or even an absence of—sales data for a particular product or not have the
causal variables identified.
Stable versus unstable data. Stable data have a distinct pattern such as seasonality or
trends. There's a randomness and no distinct pattern to unstable data.
Qualitative Forecasting - answerAn approach to forecasting that is based on intuitive or
judgmental evaluation. It is used generally when data is scarce, not available, or no
longer relevant.
Quantitative Forecasting - answerAn approach to forecasting where historical demand
data is used to project future demand. Extrinsic and intrinsic techniques are typically
used.
How to Evaluate forecast performance - answerMeasure forecast error - the difference
between actual demand and forecast demand, stated as an absolute value or as a
percentage.
Forecast Error - answerAbsolute Value
|A-F|
, A = Actual demand
F = Forecast demand
Mean Absolute Deviation (MAD) - answerSum |A-F|/Number of Periods
Mean Squared Error (MSE) - answerSum of (Errors for each Period)^2/Number of
forecast periods
Mean Absolute Percent Error (MAPE) - answerForecast Error as a Percentage/number
of periods
Bias - answerSum of (Actual Demand - Forecast Demand)/number of periods
Tracking Signal - answerAlgebraic Sum of Forecast Errors/MAD
Standard Deviation - answerSquare Root (Sum of Actual-Avg Forecast)/n-1
Forecast Accuracy - answerSum of Number of Hits/Sum of Number of Hits + Number of
misses * 100%
How collaborative planning, forecasting, and replenishment (CPFR) improves forecast
accuracy - answerA collaboration process whereby supply chain trading partners can
jointly plan key supply chain activities from production and delivery of raw materials to
production and delivery of final products to end customers.
CPFR can significantly enhance communications between suppliers and customers to
better forecast product demand.
How to maintain and optimize positive customer relationships using CRM practices -
answerFocus on putting the customer first.
Customer Segmentation - Practice of dividing a customer base into groups of
individuals who are similar in specific ways relevant to marketing.
Customer Service Life Cycle - A model that describes the customer relationship as
having four phases: requirements, acquisition, ownership, and retirement.
Forecast Consumption - Consuming the forecast as a result of order entry.
Techniques for measuring order delivery performance - answerReliability - This attribute
category focuses on quality of product and service. Number of perfect orders/total
number of orders
