Supply Chain Management, 6e, Global Edition (Chopra/Meindl)
Chapter 7 Demand Forecasting in a Supply Chain
7.1 True/False Questions
1) The forecast of demand forms the basis for all strategic and planning decisions in a supply
chain.
Answer: TRUE
Diff: 2
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Application of knowledge
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
2) For pull processes, a manager must forecast what customer demand will be in order to plan the
level of available capacity and inventory.
Answer: TRUE
Diff: 2
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Application of knowledge
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
3) The result when each stage in the supply chain makes its own separate forecast is often a
match between supply and demand because these forecasts are often very different.
Answer: FALSE
Diff: 2
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Application of knowledge
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
4) Leaders in many supply chains have started moving toward collaborative forecasting to
improve their ability to match supply and demand.
Answer: TRUE
Diff: 2
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Application of knowledge
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
5) Mature products with stable demand are usually the most difficult to forecast.
Answer: FALSE
Diff: 2
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Application of knowledge
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
1
Copyright © 2016 Pearson Education, Ltd.
,6) Forecasting and the accompanying managerial decisions are extremely difficult when either
the supply of raw materials or the demand for the finished product is highly variable.
Answer: TRUE
Diff: 1
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Analytical thinking
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
7) Forecasts should include both the expected value of the forecast and a measure of forecast
error.
Answer: TRUE
Diff: 2
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Application of knowledge
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
8) Aggregate forecasts are usually more accurate than disaggregate forecasts, as they tend to
have a smaller standard deviation of error relative to the mean.
Answer: TRUE
Diff: 2
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Analytical thinking
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
9) Collaborative forecasting based on sales to the end customer can help enterprises further up
the supply chain reduce forecast error.
Answer: TRUE
Diff: 2
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Application of knowledge
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
10) Qualitative forecasting methods are most appropriate when there is good historical data
available or when experts do not have market intelligence that is critical in making the forecast.
Answer: FALSE
Diff: 2
Topic: 7.3 Components of a Forecast and Forecasting Methods
AACSB: Analytical thinking
Objective: LO 7.2: Identify the components of a demand forecast.
11) Time series forecasting methods are the most difficult methods to implement.
Answer: FALSE
Diff: 2
Topic: 7.3 Components of a Forecast and Forecasting Methods
AACSB: Application of knowledge
Objective: LO 7.2: Identify the components of a demand forecast.
2
Copyright © 2016 Pearson Education, Ltd.
, 12) Causal forecasting methods find a correlation between demand and environmental factors
and use estimates of what environmental factors will be to forecast future demand.
Answer: TRUE
Diff: 2
Topic: 7.3 Components of a Forecast and Forecasting Methods
AACSB: Analytical thinking
Objective: LO 7.2: Identify the components of a demand forecast.
13) The forecast error measures the difference between the forecast and the estimate.
Answer: FALSE
Diff: 2
Topic: 7.3 Components of a Forecast and Forecasting Methods
AACSB: Analytical thinking
Objective: LO 7.2: Identify the components of a demand forecast.
14) The goal of any forecasting method is to predict the systematic component of demand and
estimate the random component.
Answer: TRUE
Diff: 2
Topic: 7.5 Time-Series Forecasting Methods
AACSB: Analytical thinking
Objective: LO 7.3: Forecast demand in a supply chain given historical demand data using time-
series methodologies.
15) In adaptive forecasting, the estimates of level, trend, and seasonality are updated after each
demand observation.
Answer: TRUE
Diff: 2
Topic: 7.5 Time-Series Forecasting Methods
AACSB: Analytical thinking
Objective: LO 7.3: Forecast demand in a supply chain given historical demand data using time-
series methodologies.
16) The moving average forecast method is used when demand has an observable trend or
seasonality.
Answer: FALSE
Diff: 2
Topic: 7.5 Time-Series Forecasting Methods
AACSB: Analytical thinking
Objective: LO 7.3: Forecast demand in a supply chain given historical demand data using time-
series methodologies.
3
Copyright © 2016 Pearson Education, Ltd.
Chapter 7 Demand Forecasting in a Supply Chain
7.1 True/False Questions
1) The forecast of demand forms the basis for all strategic and planning decisions in a supply
chain.
Answer: TRUE
Diff: 2
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Application of knowledge
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
2) For pull processes, a manager must forecast what customer demand will be in order to plan the
level of available capacity and inventory.
Answer: TRUE
Diff: 2
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Application of knowledge
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
3) The result when each stage in the supply chain makes its own separate forecast is often a
match between supply and demand because these forecasts are often very different.
Answer: FALSE
Diff: 2
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Application of knowledge
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
4) Leaders in many supply chains have started moving toward collaborative forecasting to
improve their ability to match supply and demand.
Answer: TRUE
Diff: 2
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Application of knowledge
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
5) Mature products with stable demand are usually the most difficult to forecast.
Answer: FALSE
Diff: 2
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Application of knowledge
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
1
Copyright © 2016 Pearson Education, Ltd.
,6) Forecasting and the accompanying managerial decisions are extremely difficult when either
the supply of raw materials or the demand for the finished product is highly variable.
Answer: TRUE
Diff: 1
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Analytical thinking
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
7) Forecasts should include both the expected value of the forecast and a measure of forecast
error.
Answer: TRUE
Diff: 2
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Application of knowledge
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
8) Aggregate forecasts are usually more accurate than disaggregate forecasts, as they tend to
have a smaller standard deviation of error relative to the mean.
Answer: TRUE
Diff: 2
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Analytical thinking
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
9) Collaborative forecasting based on sales to the end customer can help enterprises further up
the supply chain reduce forecast error.
Answer: TRUE
Diff: 2
Topic: 7.1 The Role of Forecasting in a Supply Chain
AACSB: Application of knowledge
Objective: LO 7.1: Understand the role of forecasting for both an enterprise and a supply chain.
10) Qualitative forecasting methods are most appropriate when there is good historical data
available or when experts do not have market intelligence that is critical in making the forecast.
Answer: FALSE
Diff: 2
Topic: 7.3 Components of a Forecast and Forecasting Methods
AACSB: Analytical thinking
Objective: LO 7.2: Identify the components of a demand forecast.
11) Time series forecasting methods are the most difficult methods to implement.
Answer: FALSE
Diff: 2
Topic: 7.3 Components of a Forecast and Forecasting Methods
AACSB: Application of knowledge
Objective: LO 7.2: Identify the components of a demand forecast.
2
Copyright © 2016 Pearson Education, Ltd.
, 12) Causal forecasting methods find a correlation between demand and environmental factors
and use estimates of what environmental factors will be to forecast future demand.
Answer: TRUE
Diff: 2
Topic: 7.3 Components of a Forecast and Forecasting Methods
AACSB: Analytical thinking
Objective: LO 7.2: Identify the components of a demand forecast.
13) The forecast error measures the difference between the forecast and the estimate.
Answer: FALSE
Diff: 2
Topic: 7.3 Components of a Forecast and Forecasting Methods
AACSB: Analytical thinking
Objective: LO 7.2: Identify the components of a demand forecast.
14) The goal of any forecasting method is to predict the systematic component of demand and
estimate the random component.
Answer: TRUE
Diff: 2
Topic: 7.5 Time-Series Forecasting Methods
AACSB: Analytical thinking
Objective: LO 7.3: Forecast demand in a supply chain given historical demand data using time-
series methodologies.
15) In adaptive forecasting, the estimates of level, trend, and seasonality are updated after each
demand observation.
Answer: TRUE
Diff: 2
Topic: 7.5 Time-Series Forecasting Methods
AACSB: Analytical thinking
Objective: LO 7.3: Forecast demand in a supply chain given historical demand data using time-
series methodologies.
16) The moving average forecast method is used when demand has an observable trend or
seasonality.
Answer: FALSE
Diff: 2
Topic: 7.5 Time-Series Forecasting Methods
AACSB: Analytical thinking
Objective: LO 7.3: Forecast demand in a supply chain given historical demand data using time-
series methodologies.
3
Copyright © 2016 Pearson Education, Ltd.
