DM

Question 1

DM

Answer 1

Demand Management
(DM)

collects and
coordinates all the potential demands
(from internal and external customers).

Question 2

DM
activities
include

Answer 2

demand forecasting,
entering customer orders, promising
delivery dates, and confirming order
status.

Question 3

Demand
management
provides a link to

Answer 3

The marketplace
Sister plants
Warehouses
Other internal and 
external customers

Question 4

Demand
management
functions

Answer 4

information gathering
Communicating with 
customers
Identifying all sources 
of demand

Question 5

Demand management coordinates

demand

Answer 5

quantities and timing with the
planning and control activities of the
company

Question 6

Independent

demand

Answer 6

Customer demand
that is not directly influenced by the actions
of the firm (e.g. customer orders)

Question 7

Dependent

demand

Answer 7

Demand that is 
driven by the plans and activities of the 
firm (e.g. 
demand for components
, 
demand from warehouse)

Question 8

An important concept in DM is that

demand forecasts are

Answer 8

consumed
over
time by actual customer orders

MPS secures production capacity based 
on demand forecasts 

The capacity available is consumed by 
actual customer orders

Question 9

Make-to-Stock (MTS)

Customer demand

Answer 9

is filled from finished
goods
inventory

EXP. TV

Question 10

Assemble-to-Order (ATO)

Customer requirements are met by

Answer 10

a 
combination of standard options 
(e.g., 
personal 
computers, fast food)

Primary task of 
DM is 
to define the 
customer’s order in terms of 
components and options (configuration 
management)

Question 11

Make-to-Order (MTO)

Products
are

Answer 11

built to customer 
specifications, starting with raw materials 
(e.g., airplanes
)

Primary task of 
DM 
is gathering information 
about customer needs and coordinating 
with manufacturing and engineering

Question 12

Engineer-to-Order (ETO)

Firm works with

Answer 12

the customer to design 
the product, then produces the product, 
starting with raw materials 
(e.g., ships)

Primary task of 
DM 
is similar to one in 
the 
MTO 
environment, but involves 
engineering more

Question 13

Organizational responsibility for DM
activities can be distributed throughout
the firm

Answer 13

Sales, customer service, or supply chain
management
departments

Question 14

(CPFR)

Answer 14

Collaborative Planning, Forecasting, 
and Replenishment
Designed to improve competitiveness by 
facilitating communication between 
customers and suppliers

Under 
CPFR, 
supply chain partners 
develop one consensus forecast

Goal is to reduce variance between 
supply and demand

Developed by the Voluntary Interindustry 
Commerce Standards Association

Question 15

CPFR Steps

Answer 15

1
Establish collaborative relationship–may 
require process redesign
2
•
Create joint business plan
3
•
Create sales forecast
4
•
Identify exceptions to the sales forecast
5
•
Resolve/collaborate on exception items
6
•
Create order forecast
7
•
Identify exceptions to order forecast
8
•
Resolve/collaborate on exception items
9
•
Generate order