Demand Forecasting & Inventory Management

What is the main purpose of demand forecasting?

• To reduce uncertainty in future demand

• To increase procurement cost

• To align production with customer needs

• To maximize holding cost

Which of the following are types of demand variations?

• Seasonal

• Cyclical

• Random

• Holding

Why is historical data important in demand forecasting?

• It helps identify past demand patterns

• It reduces the need for safety stock

• It eliminates procurement cost

• It provides a base for future projections

Which of these is an example of seasonal demand?

• Umbrella sales during the rainy season

• Daily demand for bread

• Car sales increasing during festivals

• Random demand fluctuations

Cyclical demand is best described as:

• Long-term demand changes linked to economic cycles

• Short-term random changes in demand

• A sudden demand spike

• A constant upward trend

What does a trend in demand forecasting represent?

• Long-term movement in demand

• Seasonal fluctuation

• Procurement cost

• Safety stock

The primary goal of inventory management is to:

• Minimize stock-out cost

• Ensure smooth flow of materials

• Increase procurement cost

• Maximize uncertainty

Which of the following are components of inventory cost?

• Procurement cost

• Holding cost

• Stock-out cost

• Labor cost

Procurement cost generally includes:

• Ordering cost

• Transportation cost

• Purchase administration cost

• Safety stock cost

Holding cost includes which of the following?

• Storage cost

• Insurance cost

• Deterioration and obsolescence cost

• Transportation cost