Week 2

Demand planning:

• Is very seldom practiced by companies

• Includes the steps and the process to arrive at estimates of profitability

• Only involves demand planners

• Incorporates inputs to predict or approximate future customer demand

Which of the following is NOT an assumption used to calculate EOQ?

• A constant and known replenishment

• The satisfaction of all demand

• A constant cost that is independent of the order quantity or time

• A changing rate of demand over time

The number of potential buyers in a specific market for a given product or service will influence demand. If the market size:

• Decreases, this can mean a lower quantity of potential buyers may be available to purchase products and services

• Increases, this can mean a lower quantity of potential buyers may be available to purchase products or services

• Decreases, this can mean that no potential buyers are available to purchase a company’s products or services

• Decreases, this can mean a higher quantity of potential buyers may be available to purchase products or services

Examples of risk events that have the potential to impact the demand plan are:

• Changes in management and leadership

• Introduction of a new purchase requisition and purchase order process

• Natural disasters, terrorism, and currency fluctuations

• Internal organisational consolidation and changes

Demand management involves:

• Selling products to customers

• Adjusting internal operations and plans to match actual customer demand

• Placing orders for products

• Providing discounts to customers

The two main types of demand are:

• Independent and dependent

• Known and unknown

• Constant and fluctuating

• Short term and long term

A good demand planning process enables a company to link:

• Anticipated demand with financial charts

• Unanticipated demand with customers

• Demand forecasting capabilities with supply planning capabilities

• Reactions to changes in demand with warehouses

Which of the following are components of a demand plan?

• Demand forecast

• Locations

• Demand forecast, locations, and timeframe

• Timeframe or horizon

Which of the following describes a bill of material?

• It describes manufacturing schedules

• It lists items needed to assemble a finished product

• It documents sales history

• It defines timeframes

Which replenishment method results in the same amount of product being ordered each time?

• Fixed order interval

• Fixed order quantity

• Safety stock

• Moving average