Forecasting Methods

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Questions and Answers

What is the primary purpose of quantitative forecasting?

  • To identify potential demand and market forces
  • To use past sales data to predict future demand (correct)
  • To make predictions based on expert opinions
  • To minimize the cost of ordering and holding stock

What is the main advantage of having a comprehensive ERP solution?

  • It provides visibility into all data that impacts forecasts (correct)
  • It is a method used to make purchasing decisions
  • It helps to minimize the cost of ordering and holding stock
  • It helps to identify potential demand and market forces

What is the goal of Economic Order Quantity (EOQ) calculation?

  • To minimize the cost of ordering and holding stock (correct)
  • To identify potential demand and market forces
  • To maximize the cost of ordering and holding stock
  • To determine the most profitable number of units to order

What is the main difference between qualitative and quantitative forecasting?

<p>Qualitative forecasting relies on expert opinions, while quantitative forecasting uses historical data (B)</p> Signup and view all the answers

What is the purpose of Safety Stock?

<p>To hold extra inventory in case of unexpected demand (B)</p> Signup and view all the answers

What happens to the cost of ordering an inventory when ordering in bulk?

<p>It increases (D)</p> Signup and view all the answers

What is the term for extra stock held above the desired inventory level?

<p>Buffer Stock (B)</p> Signup and view all the answers

Which of the following is NOT a type of inventory carrying cost?

<p>Marketing Cost (D)</p> Signup and view all the answers

What is the primary reason companies hold buffer stock?

<p>To mitigate against stockouts or overstocking (B)</p> Signup and view all the answers

What happens to products that reach the end of their lifecycle?

<p>They are written-off and disposed of (D)</p> Signup and view all the answers

What is the term for the return the company could make on the money tied up in inventory?

<p>Opportunity Cost (C)</p> Signup and view all the answers

What can companies do to minimize obsolete inventory?

<p>Offload stock while it still has some value (D)</p> Signup and view all the answers

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